Home prices in Canada see biggest year on year gain since 2010
| National home sales in Canada increased by 3.1% from March to April and prices were up 13.1% year on year, the biggest gain since May 2010, the latest index shows. |
The data from the Canadian Real Estate Association (CREA) also shows that actual (not seasonally adjusted) activity was up 10.3% compared to April 2015 while the number of newly listed homes was little changed with a decline of 0.2% from March to April.
Sales were up in April compared to the previous month in about 70% of all local markets, led by the National Capital Region and Edmonton. Following small declines the previous month, activity held steady in the Greater Toronto Area (GTA) and edged lower in Greater Vancouver.
‘National home sales set new monthly records over the past two months, even as activity in Greater Vancouver and the GTA appears to have topped out,’ said CREA president Cliff Iverson.
‘With almost three quarters of all local markets posting sales gains in April, there are plenty of other places where sales are climbing as we head into the busiest time of the year for home buyers,’ he added.
CREA chief economist Gregory Klump pointed out that supply shortages and tight housing market conditions have become self-reinforcing in the GTA and the Greater Vancouver Area appears to be heading in that direction too.
‘While significant home price gains may entice some homeowners in these markets to list their home for sale, the issue for many is that the decision to move means they would also be looking to buy while competition for scarce listings is fierce,’ he explained.
‘As a result, many home owners are deciding to stay put and continue accumulating capital gains. That’s keeping listings off the markets at a time when they are already in short supply,’ he added.
Actual (not seasonally adjusted) sales activity rose 10.3% year on year ago to shatter all previous records for the month of April. It also marked the second highest level for transactions for any single month and stood 16.5% above the 10 year average for the month of April.
Activity was up from year-ago levels in about 70% of all local markets, led by a number of markets in British Columbia as well as the GTA and the number of markets where new supply rose and where it fell was fairly evenly split. New listings were up most in Edmonton and on Vancouver Island but fell in the GTA, London and St. Thomas as well as Newfoundland and Labrador.
The national sales to new listings ratio rose to 64.5% in April 2016, the ratio’s tightest reading since October 2009. A sales to new listings ratio between 40% and 60% is generally consistent with balanced housing market conditions, with readings below and above this range indicating buyers’ and sellers’ markets respectively.
The ratio was above 60% in about half of all local housing markets in April, virtually all of which are located in British Columbia, the Greater Toronto Area or in Southwestern Ontario.
There were 4.7 months of inventory on a national basis at the end of April 2016, the lowest level in more than six years and a reflection of increasingly tighter housing markets in B.C. and Ontario. The number of months of inventory currently sits at or below two months in a growing number of local markets in British Columbia, the GTA and environs and in Southwestern Ontario.
For the third consecutive month, year on year price growth accelerated for all property types tracked by the index. Continuing the trend seen in recent months, two storey single family home prices posted the biggest year on year gain at 12.3%, followed by townhouse/row units at 9.8%, one storey single family homes at 9.4% and apartments at 7.9%.
While nine of the 11 markets tracked by the index posted year on year price gains in April, price growth among housing markets continues to vary widely. Greater Vancouver, up 25.3%, and the Fraser Valley, up 25.6%, posted the largest gains, followed by Greater Toronto up 12.6%, Victoria up 12% and Vancouver Island up 8.2%.
By contrast, home prices fell by 3.5% and 2.4% in Calgary and Saskatoon respectively, which are smaller declines than those posted by these markets in March.
Year on year price growth advanced further into positive territory in Regina with growth of 1.9% and was up 1.1% in Ottawa, by 1.3% in Greater Montreal and up 6.6% in Greater Moncton.
The national average price continues to be pulled upward by sales activity in Greater Vancouver and Greater Toronto, which are among Canada’s tightest, most active and expensive housing markets.
Indeed, if these two housing markets are excluded from calculations, the average is a more modest $369,222 and the year on year gain is reduced to 8.7 %.
Even then, the report says this reflects a tug of war between strong average price gains in housing markets around the GTA and in the Lower Mainland of British Columbia versus flat or declining average prices elsewhere in Canada. The average price for Canada net of sales in British Columbia and Ontario in April 2016 was down 1.7% year on year to $301,951.