A recent report from the Canadian Real Estate Association on Wednesday indicates a decline in home transactions in January of 1.3%. Home sales in Toronto, Vancouver and Montreal decline significantly as home prices keeps increasing.
While home sales increased by 1.9% in January from the previous years, home prices increased 15.0% from 2016, indicating the main factor behind low sales in Canada’s hottest real estate markets.
The level of sales made in January were almost similar to the amount of sales made in November after the government have introduced new mortgage rules which prevented many buyers from participating in the real estate market.
Mortgage rules have continued to be tightened by the government to cool down market prices but home prices in Toronto have sustained the contribution of the housing market towards the national economy.
Toronto has been one of the only markets that were not affected by the measures taken by the government to cool down housing prices.
According to the CREA, a drop in home sales is inevitably fueling home prices in Toronto as home sellers of the limited home available are embarking on bidding wars which are driving up home prices.
Gregory Klump, CREA’s chief economist stated “unless home sales activities are curtailed, home prices will continue to increase especially in regions with lack of home supply.”
Home prices in Vancouver have begun increasing after declining in 2016 when many local buyers and housing experts attributed the high home prices to foreign buyers’ involvement in the real estate markets with the government responding to these claims by introducing a 15% tax on foreign buyers.
Presently, the Canadian housing market is favoring sellers as new home listings continue to fall short in the market.