Home prices aren’t the only aspect of the housing market waning these days.
For the first time in over 45 years homeownership rates are also on the decline in Canada.
The share of homeowners is dropping in 11 of 13 provinces and in 88 of the country’s largest 100 cities, according to an analysis conducted by Point2 Homes based on 2016 Statistics Canada data.
The national homeownership rate has risen steadily for four decades, rising from 60.3% of the population in 1971 to a high of 69% in 2011. In 2016, the homeownership rate fell to 67.8%.
The survey’s authors cite an analysis published by Maclean’s that attributes the drop to the burst of China’s speculative bubble in 2015, which trickled down to Canada’s resource-based economy.
“The collapse of oil prices and the country’s heavy reliance on exports to its Asian partner pushed Canada into a recession. The ensuing economic deceleration affected wages, hence lowering people’s purchasing power,” the report notes. “Home prices, however, kept going up, leading to the decline in homeownership rates revealed by the 2016 Statcan numbers.”
Expectedly, the drop in the homeownership rate led to an increase in renters, with the national rate rising to 32.2% in 2016 from 31% in 2011.
The only two jurisdictions that bucked the trends were Quebec and the Northwest Territories, where homeownership rates have risen to 61.3% and 53.7%, respectively. Despite the increase, both still have the lowest homeownership rates in the country.
Meanwhile, some other recently released indicators are showing persisting weakness in the housing market as well.
Home Prices Flat in August
Seasonally-adjusted figures from the Teranet-National Bank National Composite House Price Index showed prices were flat in August.
“[A]fter seasonal adjustment, the downtrend of June and July did not turn around in August,” the report notes.
The index was up just 1.4% from a year earlier, marking the smallest 12-month rise since November 2009.
The reports explains the weakness as being partly attributable to a peak in home prices reached in August 2017, and as such expects the 12-month rise to accelerate in the months ahead.
Canada Lagging on House Price Inflation
Recent measures taken to cool Canada’s housing market appear to be working judging by a new global ranking of price inflation by Knight Frank.
Canada fell to 37th place as of Q2 2018. Just three months ago Canada ranked 15th, and was fourth just a year ago.
The report pegs the country’s annual house price growth rate at 2.9%.
Of course, this isn’t a list where ranking first is to be envied. The top ranked country, the Mediterranean island of Malta, saw home prices explode 17% year-over-year.
Other Tidbits About Home Ownership in Canada
Here are some of the other key findings from Point2’s analysis on homeownership rates:
- Caledon, ON recorded the highest homeownership rate in Canada, at 90.8%, followed by Vaughan, ON at 90%.
- Montreal, QC posted the lowest percentage of homeowners, at 37%, but also saw the largest increase in homeownership, rising by 2.6% from 2011 to 2016.
- Waterloo, ON posted the largest decrease in homeownership rate over the same period, dropping by 7.2% to 69%.
- Toronto’s homeownership rate decreased by 3.3%.
- Vancouver’s homeownership rate decreased by 3.4%.