The Guardian (Charlottetown)

Housing free fall

March home sales volume plunges 22.7%, national average price down 10.4%: CREA

- BY ARMINA LIGAYA

“‘Affordably priced’ homes are becoming less affordable while mortgage financing for higher priced homes remains out of reach of many aspiring move-up home buyers.” Gregory Klump, chief economist of the Canadian Real Estate Associatio­n.

The most-affordable segments of Canada’s housing market are seeing the biggest price hikes as recent changes to mortgage regulation­s fuel demand for lower-priced homes such as condominiu­ms, according to the country’s real estate industry organizati­on.

The tighter mortgage lending rules, which make it harder for home buyers to qualify for uninsured mortgages, are also shrinking the pool of qualified buyers for higher-priced homes, said Gregory Klump, chief economist of the Canadian Real Estate Associatio­n.

“Given their limited supply, the shift of demand into lower price segments is causing those sale prices to climb,” he said in a statement as the associatio­n released its latest figures for the month of March. “As a result, ‘affordably priced’ homes are becoming less affordable while mortgage financing for higher priced homes remains out of reach of many aspiring moveup home buyers.”

Home sales across the country have dropped in the wake of several government policy measures, including a stress test for home buyers with a down payment of more than 20 per cent, that were implemente­d to cool the country’s hot housing market. Last March, national home sales activity had reached an all-time record for that month, according to CREA.

The number of Canadian homes sold in March plunged 23 per cent and the national average price was down 10 per cent from the same month last year amid double-digit plunges in most housing markets across the country, according to the latest monthly sales data released Friday.

CREA said Friday the level of sales activity marked a fouryear low for the month of March and was seven per cent below the 10-year average. Still, national home sales were up from the previous month by 1.3 per cent, according to CREA’s latest statistics.

Sales prices are slipping too, with the national average price for all types of residentia­l property down to about $491,000, down 10.4 per cent from March of last year - with the Vancouver and Toronto markets causing most of the drag.

Excluding Canada’s two most expensive real estate markets, the national average price would be $383,000 - a decline of two per cent from March 2017.

But a closer look at the different housing segments reveals a mixed landscape, with lowerprice­d homes showing the largest gains.

Apartment units posted the largest year-on-year price gains in March, up 17.8 per cent, followed by townhouse/row units at 9.4 per cent. One-storey single family homes saw price gains in March of just 1.3 per cent, and two-storey single family home prices were down two per cent from a year ago, CREA says.

“The housing market continues to adjust to stricter mortgage rules, recent Bank of Canada rate hikes and some provincial policy moves,” said BMO Capital Markets’ senior economist Robert Kavcic in a research note Friday. “While we’re seeing some signs of stability, the adjustment likely has some time yet to go.”

As of Jan. 1, home buyers with a down payment larger than 20 per cent seeking a mortgage from a federally regulated lender are now subject to a financial stress test. These borrowers now have to prove that they can service their uninsured mortgage at a qualifying rate of the greater of the contractua­l mortgage rate plus two percentage points or the five-year benchmark rate published by the Bank of Canada.

The new policy reduces the maximum amount buyers will be able to borrow to buy a home. An existing stress test already requires those with insured mortgages to qualify at the Bank of Canada benchmark five-year mortgage rule.

 ?? CP PHOTO ?? A for sale sign is shown in by new homes in Beckwith, Ont., just outside Ottawa, in January, 2018. The number of Canadian homes sold in March plunged 22.7 per cent from the same month last year. The national average price was around $491,000, down 10.4...
CP PHOTO A for sale sign is shown in by new homes in Beckwith, Ont., just outside Ottawa, in January, 2018. The number of Canadian homes sold in March plunged 22.7 per cent from the same month last year. The national average price was around $491,000, down 10.4...

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