Buyers control housing market
Sales lowest since 2012 and prices steady
Canadian home sales in December were down for a fourth month in a row, capping the weakest annual sales since 2012, the Canadian Real Estate Association said Tuesday.
The association said home sales fell 2.5 per cent on a month-over-month basis in December, reaching 36,759 on a seasonally adjusted basis. Compared with December 2017, home sales in the final month of 2018 were down19 per cent.
CREA president Barb Sukkau attributed the drop to a rush of buyers at the end of 2017 ahead of tighter mortgage rules that came into force on Jan. 1, 2018.
“The stress-test has weighed on sales to varying degrees in all Canadian housing markets and will continue to do so this year,” she said in a statement. The CREA said December home sales were down from a year ago in three-quarters of all local markets, led by B.C.’s Lower Mainland, the Okanagan, Calgary, Edmonton, the Great- er Toronto Area and HamiltonBurlington.
Meanwhile, the CREA said the national average price for homes sold in December was down 4.9 per cent year-overyear, reaching $472,000.
Excluding Greater Vancouver and the Greater Toronto Area, two of Canada’s most active and expensive markets, the average sale price was just under $375,000.
BMO Capital Markets senior economist Robert Kavcic took the drop in sales and prices to be signs that the market has softened and “the headlinegrabbing drama in recent years has largely run its course.”
“It’s probably not a stretch to think that the Canadian housing market has entered into a prolonged period of relative stagnation, where sales are roughly flat and prices no longer outrun inflation,” he wrote in a note to clients.
“This would be a big change compared to conditions we’ve experienced over the past decade, especially in Toronto and Vancouver, but it’s not at all uncommon when looking back through history and across different markets.”
In the Greater Toronto Area, he said, he expected prices to keep up with inflation, but figures it will be a “long while” before March 2017 price levels are seen again.
Montreal and Ottawa, he said, are likely “best positioned to keep churning out real home price gains” in 2019. Looking ahead, TD Bank economist Rishi Sondhi predicted declines seen in December will weigh on residential investment and overall economic growth across all markets.
“Our forecast calls for Canadian sales to basically tread water after 2018’s plunge, as the impact of rising borrowing costs and tighter lending conditions are countered by strong population gains and ongoing job growth,” Sondhi said.
“Still, the level of sales will remain relatively low compared to recent years.”