Canada’s housing market continued to cool in June, with rising interest rates and lower sales and prices.
The Canadian Real Estate Association (CREA) said on Friday that June sales were down 23.9% compared to last year. Three-quarters of all domestic markets have declined, especially in the most populous regions such as the Greater Toronto Area (GTA), Greater Vancouver, Calgary, Edmonton, and Hamilton-Burlington. The June decline was more modest than the April and May declines, but sales were down 5.6% compared to last month, the fourth straight month of decline.
Average home prices are also falling. According to CREA, average home prices in Canada were $ 655,850, down 1.8% from June last year. This shows a gradual decline compared to 2021, but average home prices have fallen sharply since they hit record highs in February. From February to June, prices fell by more than $ 150,000, or more than 18%.
“Sales activity continues to slow in the face of rising interest rates and uncertainty,” CREA Chair Jill Oudil said in a statement.
“Currently, borrowing costs outpace supply as a major factor affecting the housing market, but supply problems have not been resolved,” he said.
CREA’s MLS Home Price Index (HPI) is a more accurate price comparison than the median or average price, down 1.9% on a monthly basis. According to Bloomberg News, this decline is the largest temporary dating back to 2005.
After removing sales in Vancouver, GTA and Canada’s two most popular housing markets, the average national home price was $ 541,350.
According to CREA, most of the decline in monthly sales was seen in Ontario, but prices were eased in parts of British Columbia as well. Prices are almost flat across Prairie, according to the real estate group, but Quebec is now showing signs of a slight decline.
The number of new listings increased 4.1% on a monthly basis, primarily due to increased supply from Montreal.
“Terrible wobbling” housing market
The slowdown in the housing market is due to the Bank of Canada aggressively tightening monetary policy in response to the surge in inflation. This week, the World Bank surprised markets and economists. Super large 100 basis points Hiking, rate to 2.5%. Earlier this year, the central bank’s benchmark interest rate was 0.25%.Hiking is sending borrowing costs for Canadians Floating rate mortgages and mortgage loans.
Robert Kavic, senior economist at BMO Capital Markets, said June sales represent a “terrible wobble” housing market before the Bank of Canada’s full percentage point increase is considered. increase.
“Extreme times Excess demand It’s essentially over, and resale volumes and prices are on track for a very weak year. “
“The bottom line is that the market was already cracked after the first move in BoC interest rates. This only reinforces how emotionally driven the market was. This week’s 100 basis point rate hike will be next year. Get ready for a deeper fix. “
“It’s hard to see homeowners get immediate bailouts,” said Randall Bartlett, senior director of Canadian economics at TD, as the Bank of Canada warns of further rate hikes.
“The Canadian housing market remains flat as borrowing costs continue to skyrocket,” he said in a Friday survey note.
“Sure, we now see that the potential for recession in 2023 is nearly equal and housing investment is a major impediment to the outlook.”
Alicja Siekierska is a senior reporter for Yahoo Finance Canada. Follow her on her Twitter @alicjawithaj..