Photo: James Bombales

The Canadian housing market has been in a bit of a funk ever since a new mortgage stress test came into effect on January 1. National home sales have been falling on a year-over-year basis ever since, and last month was no exception. According to one economist, the new policy may have postponed the market’s annual spring sales bump.

“The new stress test clearly was still a factor in the Toronto and Vancouver areas in April,” writes RBC economist Robert Hogue, in a recent note. “Activity was weak in both markets last month — down by 32.1 per cent in Toronto and by 27.4 per cent in Vancouver relative to a year ago.”

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Hogue writes that sellers might be delaying listing their properties amidst uncertainty about the state of the market, which could push back the “usual spring-season ramp-up.” GTA home listings were down 24.6 per cent year-over-year in April.

“Typically you see home resale activity pick up in March and peak during the April-May period,” Hogue tells BuzzBuzzNews. “But we’re not seeing the usual pick up in activity as clearly as we have in the past.”

As to whether the pick up will come later in the year, Hogue calls this the “big question everybody’s trying to answer.” He believes there will likely be a pickup in sales later in the year, but isn’t able to say when, or by how much.

“We would normally expect to see some kind of rebound in sales, but we don’t know yet how much the stress test is pushing back activity, or to what extent this is a permanent effect,” he says.

Hogue writest that GTA prices should please policy-makers, as the aggregate benchmark price fell below year-ago levels for the second month in April. Single detached prices were down 10.3 per cent year-over-year, while condo prices were up 10.2 per cent.

“On a year-over-year basis, the drop in the aggregate price virtually matched the decline recorded during the 2008-2009 recession,” he writes. “We’re close to the bottom, though. In fact, the level bottomed three months ago. It will take another month or two before the year-over-year comparisons begin to show it.”

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