Home Prices in Canada Likely to Climb at a Double-Digit Pace in 2016
In April, Canada’s existing home sales was up 3.1%, reaching the highest level for the April month. The sales-to-listings ratio climbed to 64.5. The average existing home price grew 13.2% y/y. Market segments throughout are experiencing price pressures, while quality adjusted MLS HPI rose by 10.3% in April.
Meanwhile, two-story single family home prices were up 13.3% y/y, leading the overall rises; however, apartment prices are also quickening and grew strongly by 7.9% y/y last month. Region wise, markets in Toronto and Vancouver took a break in terms of sales activity. The activity throughout Canada was driven by solid sales recorded in other markets. Both GVA and GTA markets continued to be the tightest in Canada along with other markets in Ontario and B.C. Both the provinces contributed the most to the rise in prices throughout the country.
Home prices fell 1.7% y/y throughout the remaining provinces. In the past few months, certain commodity-dependent markets seem to have stabilized.
Prices of homes are still declining in Saskatoon and Calgary. However, Regina and Edmonton have registered some recovery in prices. Canada’s existing home sales report for April implies that execution of higher required down-payments for insured mortgages effected markets of Vancouver and Toronto. Both the markets experienced flat or declined activity for the second straight month. A home’s average price has increased by over $100,000 in Toronto and Vancouver in the last year.
However, demand is likely to broaden in the surrounding areas, noted TD Economics in a research report. “Overall, we expect home prices to rise at a double-digit pace this year, driven mainly by markets in Ontario and British Columbia. Still, we expect home prices to lose some steam next year as rates begin to tick higher and overvaluation in key market weighs on demand”, added TD Economics.