The average home in Canada sells for almost $500,000. Surprisingly, last month’s moderate price gains were the lowest in two years, and Canada’s housing market is heading for a serious slowdown in 2018, according to the Canadian Real Estate Association (CREA).
- The average Canadian home sale price rose 5.7% to $496,500 in December
- Canada home price gains were their lowest since early 2016, despite modest growth
- Price growth is gradually decelerating, and experts expect further market correction in 2018
The average Canadian home is selling for almost half a million dollars because of extraordinarily inflated prices in Toronto and Vancouver. Canada’s housing problem, however, is not just concentrated in two inflated markets. Price gains are slowing down – with some even declining – in most top Canadian markets.
The best gauge of the overall market, CREA says, is their Multiple Listing Service House Price Index. The MLS HPI increased by 9.1% year-over-year in December, the lowest figure in almost two years
“The deceleration in price gains largely reflects trends among Greater Golden Horseshoe housing markets tracked by the index, particularly for single-family homes,” the group said.
Recent policy changes to Canadian mortgage regulation is pushing large amounts of buyers away from overheated markets like Toronto, says Toronto-Dominion Bank economist Rishi Sondhi.
“Much of the decline in average prices appears to be related to a shift in activity away from higher priced regions,” Sondhi said. “Greater Toronto Area sales fell to 18 percent of all homes in Canada during the month — the lowest in a decade.”
Activity in the Canadian housing market is shifting out of overheated markets, but overall home sales across the country rebounded in the months ending 2017. In December, they increased for the fifth month in a row, fully recovering from their mid-summer dip.
“Home sales in December were likely boosted by seasonal adjustment factors and a potential pull-forward of demand before new mortgage regulations came into effect this year” CREA’s chief economist Gregory Klump said.