Photo: James Bombales
June was a relatively positive month for the Canadian housing market, as a slight uptick in sales hinted that the market was beginning to adjust to the new mortgage stress test. But it wasn’t good news across the board.
“After a difficult start to the year, the housing market is showing signs that conditions are broadly stabilizing,” writes BMO Canadian rates and macro strategist director Benjamin Reitzes, in a recent note. “Despite the less negative overall picture, the market remains highly segmented.”
Vancouver continues to struggle to adjust to tightened foreign buyer rules, according to Reitzes. The market saw activity and new listings pull back roughly 10 per cent in June, per the Real Estate Board of Greater Vancouver.
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“There’s a continuation of the deflation of the Vancouver market,” Reitzes tells Livabl. “You’ve got stricter foreign buyer rules, and when you pile on top of that [the mortgage stress test], it’s a lot to adjust to.”
Vancouver’s performance was also noted by TD senior economist Michael Dolega, in a recent note.
“The decline in sales was the fifth in six months, with the softness manifesting in prices,” writes Dolega. “The [Housing Price Index] was down 0.5 per cent in June, the third consecutive decline and the weakest performance since late-2016.”
Reitzes also notes that the other Western housing markets, including Calgary, continued to struggle last month, despite a rise in oil prices.
“You haven’t really seen the impact of the oil rebound [on the housing market],” says Reitzes. “Generally the pick up would lead to wage growth and job growth which would lead to a stronger housing market.”
Even markets that had seemed to dodge the effects of the stress test underperformed last month, according to Reitzes.
“Montreal and Ottawa, which have been particularly strong this year, cooled a bit as well in June,” he writes.