Canada’s housing markets showed signs of cooling in January, mainly in response to new mortgage rules effective on the first day of 2018.
Across the nation, there were 39,609 seasonally adjusted residential sales in January, the lowest monthly level in three years, according to a report released Thursday by the Canada Real Estate Association.
The figure was down 14.5% from the 46,352 recorded in December 2017, the highest monthly level on record for the past 64 years.
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While the decline spread across three-quarters of all local markets in Canada, major urban centers, including Toronto and Vancouver, posted bigger declines, as buyers in those hot markets hastened their purchases late last year in anticipation of the upcoming mortgage rules.
The new rules by the Office of the Superintendent of Financial Institutions require stress tests for potential buyers to qualify for all uninsured mortgages (used when the down payment is higher than 20%) and to raise their mortgage rate.
These measures not only lead to higher borrowing thresholds and costs, but also cause a lot of market uncertainties, according to Andrew Peck, the association’s president.
"The piling on of yet more mortgage rule changes that took effect starting New Year’s Day has created homebuyer uncertainty and confusion," Mr. Peck said in a statement.
On a yearly basis, the number of home sales in January dipped 2.4%.
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However, national home prices continued to climb due to the ongoing shortage of supply. The number of newly listed homes, which account for 85% of all local markets, fell 21.6% in January to 62,301, the lowest level since the spring of 2009, according to the report.
The Aggregate Composite Home Price Index rose by 7.7% year-over-year in January 2018 to C$602,100 (US$480,717). Greater Vancouver remained the most expensive housing market in Canada, with composite prices rising 16.6% year-over-year to C$1,056,500 (US$843,510). In the Greater Toronto area, home prices rose 5.4% to C$743,200 (US$593,371) in January.
| Compare Vancouver and Toronto | |||
| Vancouver | Toronto | Canada | |
| # of sales | 2,827 | 6,448 | 39,609 |
| M-o-M change | -10.5% | -26.6% | -14.5% |
| Y-o-Y change | 18.9% | -22.5% | -2.4% |
| Home price | $1,056,500 | $743,200 | $602,100 |
| M-o-M change | 0.58% | -0.04% | 0.3% |
| Y-o-Y change | 16.64% | 5.16% | 7.66% |
| New Listings | 3,988 | 11,581 | 70,058 |
| M-o-M change | -35.3% | -38.7% | -18.9% |
| Y-o-Y change | -3.9% | 17.0% | -1.4% |
| Source: Canada Real Estate Association | |||
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In terms of property type, condominiums continued to gain popularity in Canada. Condo apartments posted 20.1% annual price gains in January, the largest growth across the board.
Prices for townhouse/row house units rose 12.3%. Single-family homes saw 2% to 4% annual price growth in January.