Photo: Danielle Scott/Flickr
Although a new home may have been high on many Canadians’ wish lists, residential real estate activity cooled this past holiday season. But the latest figures from the Canadian Real Estate Association indicate the country’s resale market is already heating up in the New Year.
In the first month of 2016, home sales across Canada increased 0.5 per cent over December on a seasonally adjusted basis, with the Greater Toronto Area (GTA) and British Columbia’s Lower Mainland — two of the country’s hottest markets — propping up national figures.
“Single family home buyers in the GTA and Lower Mainland of British Columbia had been expected to bring forward their purchase decisions before tightened mortgage regulations take effect in February 2016,” said Pauline Aunger, the association’s president, in a statement.
“If listings in these and nearby markets were not in such short supply, January sales activity would likely have reached even greater heights,” Aunger continued.
On Monday, new lending rules first announced in December took effect, increasing the minimum down payment for some homebuyers taking on government-backed mortgages.
“Tighter mortgage regulations… may shrink the pool of prospective home buyers who qualify for mortgage financing and cause national sales activity to ease in the months ahead,” explained Gregory Klump, CREA’s Chief Economist, in the same statement.
However, in the months leading up to this, the looming rule change may have boosted sales activity, wrote BMO economist Robert Kavcic in commentary published this morning.
“Even if the impact is ultimately going to be quite small, the expectation of higher down payment requirements… might have pulled some activity forward,” said Kavcic.
Kavcic added the unseasonably warm January weather in many Canadian markets “certainly didn’t hurt.”
In January, rising home sales in the GTA and BC’s Lower Mainland countered slumping performances in Calgary and Edmonton — urban centres in the oil-producing province of Alberta where the low price of crude is taking its toll — and the tourism-driven Okanagan Region in BC.
The two simmering markets also had the effect of skewing the level of national housing inventory, dragging it down to 5.3 months in January from 5.4 months in December. This is the tightest inventory has been in close to six years, CREA said.
The months of inventory represents how long the current unsold supply of houses in the country would sell out if a given month’s activity persisted indefinitely.
The national average home sale price was up 17 per cent year over year to $470,297 in January. The increase was driven by the hot Toronto and Vancouver markets.
Remove these two markets from calculations, and the average Canadian home price is $338,392.
The MLS aggregate composite index price for all housing types (one and two-storey single family homes, townhouses and row units, and apartments) climbed to $512,600 last month, up 0.6 per cent from December.
Compared to January last year, prices climbed 7.73 per cent, accounting for “the largest gain in more than five years,” according to CREA.
Greater Vancouver led all year-over-year price gains with a January index price of $775,300, an increase of 20.6 per cent over 12 months. BC’s Fraser Valley followed with an index price of $505,100, 16.9 per cent higher than it was a year ago.
Greater Toronto rounded out the top three. There, the index price hit $578,400, the third priciest market in Canada, representing a 10.7 per cent surge from year-ago numbers.