Photo: James Bombales

While the Canadian housing market has seen a slight uptick in activity over the past few months, one economist warns that it will be quite awhile before the market returns to its formerly hot conditions.

“Those hoping to see a broad-based pick-up in activity [in July] were likely disappointed,” writes RBC senior economist Robert Hogue, in a recent note.

Hogue adds that while sales were up in July, the rise can be mainly attributed to the GTA, which seems to have finally adjusted to the effects of a new mortgage stress test introduced in January.

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“Resales did rise nationally on a month-over-month basis for a third-straight time in July to 463,300 units, though more than two-thirds of the increase occurred in single market — the GTA,” he notes.

Other markets continued to falter, as activity remained at a standstill in Vancouver, Edmonton and Montreal, and fell in Calgary. But according to Hogue, the lack activity might have nothing to do with a shortage of demand.

“Buyers may not have been the cause for the lack of traction in most markets last month,” he writes. “In many cases, it looks like it was a drop in sellers. Widespread declines in new listings across Canada made it harder for buyers to find a suitable home.”

He also notes that where listings rose, sales followed — especially in Ontario.

“Where new listings rose — like in the GTA, Hamilton, Windsor and Regina — resales picked up. We believe that would-be sellers will warm up to the market as more compelling evidence of a recovery emerges,” he writes.

As for where prices are headed in the coming months, Hogue predicts they should pick up slightly, without returning to last spring’s record highs.

“We don’t think that the price acceleration at the national level in July is a sign of an impending return of overheated conditions,” he writes. “We see limited scope for GTA prices — the main contributor to the acceleration — to sustain further material gains.”

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