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Canadian Real Estate Prices Post Largest Decline Since 1995

CREA, Teranet and BMO are all reporting a national real estate slowdown.

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CREA, Teranet and BMO statistics this week all pointed towards declining Canadian real estate activity, including housing prices.

TL;DR: Real estate prices are decreasing in most Canadian markets, due to interest rates and mortgage regulations. Montreal is an exception to the national trend.

Canadian sales activity declined 11.1% in 2018, compared to a year before. The average price of a detached home dropped 4.9% to $472,000. This represents the largest slowdown since 1995 and the first time national prices have fallen since the depression in 2008.

BMO’s Chief  Economist Douglas Porter wrote in a release:

“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.”

This slower pace was felt in three quarters of all markets, most notably in British Columbia’s Lower Mainland, Okanagan Valley, Calgary, Edmonton, Greater Toronto Area and Hamilton-Burlington region.

If Toronto and Vancouver were to be removed from the statistics, the national price average would drop from $472,000 to $375,000.

Teranet’s house price index fell 0.3% in December.

Why are prices declining? – CREA weighs in 

CREA attributes the weaker annual activity to a range of economic and policy factors, including tougher mortgage requirements and rising interest rates.

CREA’s President Barb Sukkau writes:

“What a difference a year makes. Sales trends were pushed higher in December 2017 by home buyers rushing to purchase before the new federal mortgage stress test took effect at the beginning of 2018,” said . “Since then, the stress test has weighed on sales to varying degrees in all Canadian housing markets and it will continue to do so this year.”

In addition, interest rates were hiked four times between 2017 and 2018, by a total of 100 basis points. Bank of Canada recently indicated that they would further increase the rate in 2019.

CREA Chief Economist Gregory Klump expects that housing will undermine economic growth this year as the mortgage stress test has pushed home ownership affordability out of reach for some home borrowers.

Appreciation Rates by Property Type

  • Apartments, once again, posted the strongest year-over-year price increase (4.9%).
  • Townhouses and row-houses were up 3.1%.
  • House price growth was more modest –  two-storey single-family homes prices rose 0.4%, while one-storey homes were down 0.3%.

Price Growth and Activity in Montreal

Montreal and Ottawa were the only two markets that recorded price gains in December. The two cities run contrary to the regional trend, with benchmark price gains of 6.9% and 6% year-over-year respectively.

Montreal reported 2,825 sales in December, an increase of 2.5% compared to December 2017.

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This article, Canadian Real Estate Prices Post Largest Decline Since 1995, appeared first on Shupilov News.


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1 Comment
  1. Great stats. Very well articulated post. Thanks.

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