The Canadian housing market has been bracing for turbulence since the federal government intervened with stricter mortgage rules. Now, alongside rising interest rates, real estate prices are cooling down in most of Canada’s major markets.
David Madani, the senior economist at Capital Economist, says that a long-term price correction is likely in store for Canadian housing. The latest price decrease is the 4th drop in the past six months, and prices will continue to level out if new housing supply remains abundant.
- The Teranet-National Bank House Price Index has fallen 1.9% in the past six months
- Toronto now has balanced levels of housing inventory with 3-months’ worth of supply available
- Vancouver’s price index slightly increased in February, but single-family home sales fell 39.4%
The Teranet-National Bank house price index fell by 0.1% last month. National Bank senior economist Marc Pinsonneault noted that this represented the 4th time in half a year it has decreased, falling a total of 1.9% over the past 6 months.
Pinsonneault emphasized that while the February index was still up 7.5% from a year ago, momentum is noticeably weakening as January’s year-on-year figure had been up 8.7%.
According to Pinsonneault, Toronto has entered “balanced territory,” with 3 months’ worth of supply available on the market – a stark contrast from red-hot conditions a year ago, with some neighbourhoods having only 10 or 15 days of housing supply.
Meanwhile, even though Vancouver’s price index saw increases in February, Pinsonneault cautioned that the trend is unlikely to last. Latest data from the city’s real estate board supported this projection: Vancouver single-family home sales fell 39.4% year-over-year in February, while condos experienced a 7.1% decline in the same time frame.
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