Some of Canada’s most frenzied real estate markets are now rapidly cooling down, according to real estate consultancy Frank Knight’s residential cities index for the second quarter of 2018. Toronto has gone from being one of the world’s hottest residential housing markets to one of its weakest. The city registered a 2.8% decline in housing prices for the first half of 2018, compared to a 29.3% increase a year earlier.
Canada’s three hottest real estate markets, based on price change in 12 months, are now Vancouver, Ottawa Gatineau and Montreal.
|City||Rank in Q2 2018||Rank in Q2 2017||Price Change in 12 Months|
Vancouver remains at the top of the list of Canadian cities, and has risen to 10th in global rankings compared to 52nd a year earlier.
Cities in Eastern and Central Canada have shown the most improvement, including Ottawa, Montreal and Halifax.
Montréal’s real estate market has been performing exceptionally well, with increased sales registered for 43 consecutive months now, ever since March of 2015.
There are “some deep divergences” in Canada’s housing markets, Bank of Montreal chief economist Doug Porter wrote in a client note Monday, “with one emerging theme a clear split between ongoing weakness in the west and real pockets of strength in the east.”
Canadian housing market ‘in neutral’
Canada’s housing trends turned negative last month, with sales falling 0.4% from August. CREA’s September statistics showed that sales are below the 10 year average for the month.
“The Canadian housing market finds itself in neutral, with strong population increases and decent job growth countered by rising interest rates and a tighter regulatory backdrop,” wrote Bank of Montreal chief economist Doug Porter in a note.
Analysts are blaming a “tighter regulatory backdrop,” notable the new mortgage stress test on this year’s slowdown.
The average single family home in Canada cost $487,000 in September, a modest 0.2% increase compared to September 2017.
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