Home sales in Canada increased by 1.8% month on month in November with the number of new listings also rising, up 3.1% compared with October, the latest index figures shows.
Prices also increased, up by 10.2% year on year but this figure is affected by prices in Greater Vancouver and Greater Toronto as when they are excluded the annual price growth is 3.4%.

The data from the Canadian Real Estate Association (CREA) also shows that year on year sales were up 10.9% and overall the housing market remains balanced.

There was a fairly even split between the number of markets where sales posted a monthly increase and those where sales declined. The national increase was again led by monthly sales gains in the lower mainland of British Columbia and in the Greater Toronto Area.

Sales activity was down sharply in the Calgary region compared to what were historically high levels posted prior to the collapse in oil prices while the number of newly listed homes rose 3.1% led by the Lower Mainland, Calgary, Edmonton, Kingston and Ottawa.

‘Recently announced changes to mortgage regulations will likely boost sales activity in the short term, as buyers jump off the fence to beat the changes before they take effect next year,’ said CREA president Pauline Aunger.

Meanwhile, CREA chief economist Gregory Klump pointed out that changes to mortgage regulations taking effect in the middle of February next year are aimed at cooling the Greater Vancouver and Greater Toronto housing markets.

‘Minimum down payments will be going up for homes that sell for more than half a million dollars, so larger more expensive housing markets will be affected most. Unfortunately, the regulatory changes will also cause unintended collateral damage to housing markets beyond Toronto and Vancouver, including places that are facing economic headwinds from the collapse in oil prices,’ he explained.

The national sales to new listings ratio eased to 57.3% in November compared to 58% in October. A sales to new listings ratio between 40% and 60% is generally consistent with balanced housing market conditions, with readings below and above this range indicating buyers’ and sellers’ markets respectively.

The ratio was within this range in slightly fewer than half of all local housing markets in November. Of the remainder, more markets recorded a ratio above 60% than fell below 40%. Markets where demand is tight relative to supply are located almost exclusively in British Columbia and Ontario.

The number of months of inventory is another important measure of the balance between housing supply and demand. It represents the number of months it would take to completely liquidate current inventories at the current rate of sales activity.

There were 5.4 months of inventory on a national basis at the end of November 2015, down from the 5.5 months recorded in October and the lowest level in nearly six years. The national figure is being pulled lower by increasing market tightness in British Columbia and Ontario, according to the index.

A breakdown of the figures shows that two storey single family homes continue to post the biggest year on year price with growth of 8.8%, followed by one storey single family homes up 6.42%, townhouse/row units up 5.43% and apartment units up 5.22%.

Year on year price growth varied among housing markets tracked by the index. Greater Vancouver up 17.83% and the Fraser Valley up 12.36% posted the largest gains, followed closely by Greater Toronto up 10.29%. Victoria and Vancouver Island saw year on year gains that ranged between 6% and 8% in November.

Prices edged down by 2% year on year in Calgary and Saskatoon and fell by nearly 5% in Regina. While the home price declines in Calgary and Saskatoon are a fairly recent trend, prices in Regina have been trending lower since early 2014.

Prices edged higher on a year on year basis in Ottawa by 0.68%, rose modestly in Greater Montreal by 1.61% and continued to gain strength in Greater Moncton with growth of 4.81%.

The index report points out that the national average price continues to be pulled upward by sales activity in Greater Vancouver and Greater Toronto, which are among Canada’s most active and expensive housing markets. If these two markets are excluded from calculations, the average is a more modest $338,969 and the year on year gain is reduced to 3.4%.

Even then, the gain reflects a tug of war between strong average price gains in housing markets around the Greater Toronto area and the lower mainland of British Columbia versus flat or declining average prices elsewhere in Canada.

Indeed, if British Columbia and Ontario are excluded from calculations, the average price slips even lower to $302,477, representing a year on year decline of 4.7%.

CREA : Sales & Prices in Canada Still Rising but Market is Balanced by Property Wire