Falling Prices and New Mortgage Rules Boost Canadian Home Sales
(Bloomberg) -- The recent drop in Canadian real estate prices and tougher regulations that kick in Jan. 1 are beginning to juice sales.
Brokers reported a 3.9 percent jump in transactions in November, the Canadian Real Estate Associated said Thursday. That’s the second biggest increase in two years and marks a fourth consecutive rise in transactions, the longest streak since early 2016.
Canadian home prices have moderated in the second half of 2017, after various levels of governments took steps to cool things down. The country’s main banking regulator introduced stress tests for mortgages last month, and buyers may be rushing to get into the market before those rules kick in at the start of 2018.
Prices fell for six straight months, including November, the longest such run in almost a decade. The average price of a house sold in Canada last month was C$513,433 ($399,000) on a seasonally adjusted basis.
“National sales momentum remains positive heading toward year-end,” Gregory Klump, the Ottawa-based agency’s chief economist, said in a statement. “It remains to be seen whether stronger momentum now will mean weaker activity early next year once new mortgage regulations take effect beginning on New Years day.”
The association projects sales will drop 5.3 percent for all of 2018.
The November sales gain was driven by a 16 percent increase in Toronto transactions, where prices have fallen 8.8 percent over the past six months. Prices in Vancouver were up 0.4 percent in November and have gained 6.7 percent since May.
National home prices were down 0.2 percent in November and have fallen 2.7 percent over the past six months.
©2017 Bloomberg L.P.