Slowdown in property sales in Canada
18-07-2012
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National resale housing activity edged lower on a month on basis in June 2012 while price gains remained strong in Toronto, accelerated in Calgary and continued slowing in Greater Vancouver.
Sales fell 1.3% on top of a 3.4% decline posted in May. National activity was down from the previous month in slightly more than half of all local markets, with Greater Toronto and Vancouver contributing most to the small decline.
‘Canada’s housing market lost a little altitude in June, but it’s still flying pretty high. That said, sales activity and average prices bucked the national easing trend in a number of markets, which underscores that all real estate is local,’ said Wayne Moen, CREA president.
Actual, not seasonally adjusted, activity was down 4.4% in June 2012 compared to the same month last year, the first year on year decline in national activity since April 2011.
Boosted by strong activity in March and April, a total of 257,193 homes traded hands over in the first half of 2012, up 4.7% from levels reported over the same period in 2011, and marks the strongest sales for the first half of any year since 2007.
‘Home buyers didn’t rush their purchases before the most recently announced changes to mortgage regulations came into effect,’ said Gregory Klump, CREA’s chief economist. ‘That’s a big change compared to what we saw as a response to previously announced changes. It will take some time before the compound effect of previous and recent changes to regulations on Canada’s housing market becomes apparent,’ he added.
The number of newly listed homes rose 1.4% in June compared to May. The uptick was led by a second consecutive increase of new supply in Toronto. Some 42 local markets, out of 100 markets across the country, registered a monthly increase in new listings of at least 1%.
The decline in sales activity combined with an uptick in new listings resulted in a more balanced national housing market in June. The national sales to new listings ratio, a measure of market balance, stood at 51.7% in June 2012, compared to 53.1% in May. Based on a sales to new listings ratio of between 40 to 60%, nearly two thirds of all local markets were in balanced market territory in June as the number of sellers markets declined.
The actual, not seasonally adjusted, national average price for homes sold in June 2012 was $369,339, down 0.8% from the same month last year. While average sale prices in June were up year on year in about seven out of every 10 local markets, the national average price continued to be skewed downward by compositional factors, most notably by fewer sales in Vancouver in recent months compared to stronger levels last year.
The Aggregate Composite MLS® House Price Index rose 5.1% from May to June 2012. This represents a slight deceleration from the 5.2% gain reported in May.
The year on year increase was again highest in Greater Toronto at 7.9%, followed by Calgary at 5.6%, Greater Montreal at 2.7%, the Fraser Valley at 2.6% and Greater Vancouver at 1.7%.
Two storey single family homes continued to post the strongest year on year growth in June, up 6.6%. Gains for one storey single family homes at 6% also surpassed the rise in the overall index, while townhouses and apartments saw more modest gains of 3.1% and 2.7% respectively.
Year on year gains have moderated in all Benchmark housing categories except one storey single family homes. Driven by increases in Greater Toronto and Calgary, prices in this category rose at the fastest pace in nearly two years in June.
