Canada housing market Photo: George Socka/Flickr

On Monday the Canadian Real Estate Association (CREA) released its May housing report and the numbers were fairly impressive: sales of existing homes were up by 3.1 per cent month-over-month and 2.7 per cent year-over-year — the highest level of activity in more than five years. Canada’s average house price, meanwhile, ended the month at $450,886, up 8.1 per cent from a year ago. How did the country’s major financial institutions react to these figures? Find out.


While Toronto and Vancouver continued to lead the way in terms of home price and sales growth in May, RBC said what was most encouraging were the developments in Alberta and Saskatchewan where confidence in the housing market appears to be returning.

“Successive monthly gains in resales, significant reductions in the number of new listings and, as of May, evidence that prices are picking up again in Calgary lead us to believe that the healing process has begun in those markets. Thus, the good news is that conditions are improving among Canada’s softer markets.”

The “worrying news,” according to RBC, is that the hot markets of Toronto and Vancouver continue to get even hotter.

“The erosion of affordability that ensues from rapidly rising home prices increases risks. In particular, ownership costs in Vancouver and Toronto would be quite sensitive to any rise in interest rates,” the bank said.


In their analysis of the data, TD looked ahead to what the figures may mean down the road.

“Given the increase in government bond yields recently — which influence mortgage rates — mortgage rates could move higher later this year, dampening demand in Canada’s housing market. Overall, though, we expect the regional divide to continue. While sales in oil-related markets of Edmonton and Calgary have risen off their January lows, price gains remain modest. The Vancouver and Toronto markets should cool slightly on higher interest rates, however. Given the tightness in these markets, prices should remain relatively strong. Overall we expect house price gains in Canada to cool in 2016 to around two to three per cent.”


The Bank of Montreal was particularly succinct in their assessment of the latest national figures.

“The big picture remains the same: Canadian home sales and prices remain resilient, led by Vancouver and Toronto, but many markets outside those hard-hit by the slide in oil prices are in fine or improving shape as well.”


Scotiabank describes Canada’s housing market as balanced overall, with inventory ratios — new listings-to-sales and months’ supply — in line with long-term averages. However, there are potential “headwinds on the horizon”…

“The housing outlook is more challenged when mortgage rates inevitably move off current historic lows. We expect the Bank of Canada will remain on hold well into next year, if not longer, in the face of persistent economic under-performance.”

But when those borrowing costs do rise, the bank says it could lead to a roughly 10 per cent deterioration in housing affordability by the end of 2016.

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