Canada’s Home Sales Rose But Down From A Year Prior In September
Canadian home sales has gone up in September, although it was down from a year ago. Besides Greater Toronto and Greater Vancouver, the average price was about $374,500, up by 2.8 per cent.
In Ottawa, the number of houses sold in September increased for the second month in a row following the slump earlier this year which was led by a cooling in the Toronto housing market.
The Canadian Real Estate Association mentioned that, Friday sales through the multiple listing service in September increased by 2.1 per cent compared with the month before that. The increase followed a 1.3 per cent increase in August.
Michael Dolega, TD Bank senior economists stated that despite the gain in the month of August, which was because of Toronto, the increase in September was more broad.
Dolega also said that the rising interest rates and upcoming regulatory changes, as well as a possible new stress test for borrowers that have uninsured mortgages, could have an effect on the housing market.
“Having said that, after some near-term weakness, likely to last into mid 2018, activity should begin to rebound thereafter given the fundamentally supported demand related to strong job growth and strengthening wage dynamics,” Dolega addresses his clients.
The changes made by the government of Ontario, which was intended to cool Toronto’s market, has been decelerating home sales in Canada. The CREA also noted that sales in September declined by nearly 12 per cent after setting a record in March before Ontario made its housing plan public.
The Bank of Canada raised its interest rates twice this year, this therefore driving big bank prime rates and the cost of variable – rate mortgages higher. Also the cost of new fixed-rate mortgages have risen. The CREA stated that even with the encouraging September sales, it is however too early to tell if this is a longer-term trend or not.
The Office of the Superintendent of Financial Institutions is about to complete new lending guidelines. Some of the changes being made is that homebuyers who do not need mortgage insurance have to prove that they can make their payment even if interest rates rise.
“Further tightening of federal regulations aimed at cooling housing markets in Toronto and Vancouver risks creating collateral damage in markets elsewhere in Canada,” Gregory Klump CREA chief economist mentioned.
The county’s median price for homes sold in September was just over $487,000, that is up by 2.8 per cent from last year. Besides Greater Vancouver and Greater Toronto, the median price was just over $374,500.
