Canada’s real estate market shows its first sales growth in six months
According to the Canadian Real Estate Association (CREA), an average housing prices showed an annual increase by 14%, strengthening worries over the country’s most expensive markets.
CREA says the average price of a property sold over MLS system reached $686,650, marking almost a 14% hike from a year earlier.
The association believes the average price doesn’t show the real picture, as it is affected by the most expensive markets of Toronto and Vancouver. That’s why it also tracks the MLS House Price Index (HPI), which is more accurate, as it excludes certain volatility.
However, the HPI went up even higher – the index rose by 21.5% during the previous 12 months. In case of the GTA, the average home price reached $1,136,280 last month, marking an annual gain by 18%. Vancouver reported a 13% annual increase to $1,186,100.
In addition to it, Canada showed its first national home sales rise in six months, as the end of summer vacations and an improving economy supported the real estate market.
In September, national home sales were up by 0.9% from August. It was the first monthly gain since March, as benchmark home prices went up by 1.7%. Nevertheless, the new housing supply was down by 1.6%, making most local markets more profitable for sellers.
“As we are still at around two months of inventory in Canada, we need to keep a close eye on the prices,” – noted Shaun Cathcart, the real estate board’s senior economist. “Although September saw larger than we’ve expected prices gains, the fact that prices are going up is not surprising.”
Yes, the real estate market has cooled since the low interest rates and demand for larger homes pushed it to a record madness earlier this year, but home prices have remained elevated. As a result, the housing affordability issue became even worse. As the relative calmness in the market is reaching its end, the upward pressure on prices may accelerate again. This change will be a serious challenge for Prime Minister Justin Trudeau, who won the elections partially due to the promises to help first-time buyers.