private mortgage, home sales

New Housing Data Shows Strengthening Sales, Rising Prices

New housing data released in two separate reports this week paints a picture of strengthening sales activity across the country, along with moderate price gains in most markets.

The MLS Home Price Index released by the Canadian Real Estate Association was up 2.1% to $634,300 this July from July 2017. This index is a more accurate way than averages to measure price progression among the 15 cities it covers.

July is the first month since April 2017 that these benchmark prices have grown year-over-year. The gains are likely due to the Greater Toronto Area rebounding from the psychological effect of the Ontario Fair Housing Plan announced in April 2017, which included 16 measures designed to cool the market.

The Teranet-National Bank National Composite House Price index, which uses data from property records of public land registries from 11 major cities, paints a similar picture of  year-over-year growth. This index was up 1.8% year-over-year, a massive change from the overheated market in June 2017, when the market posted record gains of 14.2%.

Average home prices across Canada were also up year-over-year for the first time since January, rising 1% to $481,500.

When we exclude Canada’s two most expensive markets, the Greater Toronto and Greater Vancouver areas, the national home price drops to just $383,000.

The market may be picking up from 2017, but CREA data shows a decline of 0.38% from June.

Teranet paints a similar picture of month-over-month growth. By this measure, the national home price was up 0.8% from June to July, which is lower than the historical average of 1%. But when we adjust for seasonal variation, the market was flat.

New mortgage rules pushing Canadians into condos

OSFI, the federal bank regulator, is owed some responsibility for this. It tightened mortgage lending qualifications on January 1 of this year, and that has cooled down the market by making it harder for first-time homebuyers to qualify for a mortgage.

“This year’s new stress-test on mortgage applicants continues to weigh on home sales, but its effect may be starting to fade slightly in Toronto and nearby markets,” said CREA President Barb Sukkau. “The degree to which the stress-test continues to sideline homebuyers varies depending on location, housing type and price range.”

Its most prominent effect on the market in 2018 has been to drive sales of cheaper properties, like condos, and reduce activity among more expensive types, like detached houses.

Condos posted double-digit gains, up 10% year-over-year, as one-storey and two-storey single-family home prices continue to decline year-over-year by 0.7% and 1.5%, respectively. The decline, however, is smaller this July than it has been in previous months, suggesting a recovery is near.

British Columbia prices rising faster vs. Ontario

All cities in British Columbia tracked by CREA’s index posted double-digit gains year-over-year. Fraser Valley grew 13.83% this July, while the Greater Vancouver area grew 6.68%. Similarly, the Teranet House Price Index  showed Vancouver gained 10.63% year-over-year.

Meanwhile in Ontario, prices are growing far more slowly. The Greater Toronto Area is down 0.59% year-over-year, according to CREA, and down 4% according to Teranet. The bright spot in the province is Ottawa, which grew 7.4% according to CREA and 5% according to Teranet.

Check out the infographic below to see price trends among more Canadian cities:


Zoocasa.com is a leading real estate company that combines online search tools and a full-service brokerage to empower Canadians to buy or sell their homes faster, easier and more successfully. Homebuyers can browse homes for sale in London, Ontario, in the Ottawa real estate market and in cities across Canada on the website or the free iOS app.

  1. Interesting that you discussed improving home prices in Toronto. So let’s see:
    – CREA said prices were down month-over-month in the GTA for the second consecutive month
    – Teranet said in their own press release (YES, the same one you read to extract the data) that if you exclude seasonality that the GTA index would have been down month-over-month for the fourth consecutive month.

    Please be a bit more diligent before putting out something out on housing next time. Otherwise you end up sounding like a CREA employee (i.e. no credibility and overly bullish on the market to the point of being annoying).

    Thanks,

  2. It is ridiculous to suggest the residential housing market remains a stable three legged stool. Not clear the significance of a national average price. It means bo-diddly squat. There is a slow motion trainwreck unfolding that is the market for single family detached homes in West Vancouver and the westside of Vanvouver. These markets are already down 25-30% from their peak, and slipping further by the day. With foreign buyers having mostly moved on to friendlier pastures (notably Quebec), and interest rates poised to steadily rise, these already fragile markets are setting up to be the epicentre of an inevitable and dramatic collapse. Not sure how much longer these rediculously overvalued markets can defy the most basic of economic principals, but the combination of rising supply and falling demand do not bode well for Vancouver housing prices. Fed Chair Powell is slowly taking away the punch bowl, forcing Poloz to do the same, and most Canadians are oblivious to the risk this reality presents to the housing market. Sorry Trump but rates are going higher. To be sure, three to four more rate hikes will be enough to get the attention of those with a sizable home equity line of credit (HELOC). While a 1.5-2% bump in the prime rate does not sound like much, it represents an alarming 50%+ increase in the cost of servicing a HELOC since rates bottomed out a little more than one year ago. Is there a liquidity crisis in the making? We will know in a short 2-3 years. I strongly recommend that during this period of time that buyers of all illiquid asset classes beware!

Your email address will not be published. Required fields are marked *

More Stories
canadians desperate to pay off their debts
Canadians’ New Year’s Resolution: Pay Down that Debt
Copy link