The national average price of a home in Canada increased by 3.5% in December year on year but sales were down by 5%, the latest index data shows.

However, month on month sales increased by 2.2% although the modest rebound recovered less than half of the drop in activity from October to November which was the biggest monthly fall in more than four years.

Overall sales increased month on month in about 60% of all markets, led by Calgary and Edmonton where sales rallied following large declines in November, according to the figures from the Canadian Real Estate Association (CREA).

The national average price for homes sold in December 2016 was $470,661, up 3.5% from where it stood one year earlier, the smallest year on year increase in nearly two years and it continues to be pulled upward by sales activity in Greater Vancouver and the Greater Toronto Area, which remain two of Canada’s tightest, most active and expensive housing markets.

That said, Greater Vancouver’s share of national sales activity has diminished considerably over the last year, giving it less upward influence on the national average price. The average price is reduced by almost $120,000 to $352,513 if Greater Vancouver and GTA sales are excluded from calculations.

The number of homes changing hands in 2016 was up by 6.3% annually, reflecting strong sales activity in the first half of the year that has since softened and according to CREA president Cliff Iverson tightened mortgage regulations are expected to contribute to lower sales activity this year.

Indeed, Gregory Klump, CREA’s chief economist, pointed out that new regulations mean that in order to qualify for a mortgage, home buyers will either have to save longer for a bigger down payment or purchase a lower priced home.

‘In urban centres where the latter are in short supply, that’s likely to translate into fewer sales,’ he explained.

The number of newly listed homes fell 3% in December month on month, affecting 60% of markets with sizeable declines in British Columbia’s Lower Mainland, Calgary and the Greater Toronto Area (GTA).

With sales up and new listings down, the national sales to new listings ratio rose to 63.5% in December compared to 60.3% in November. 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 above 60% in more than half of all local housing markets in December, the vast majority of which are located in British Columbia, in and around the GTA and across Southwestern Ontario.

The number of months of inventory is another important measure of the balance between housing supply and demand. It represents how long it would take to completely liquidate current inventories at the current rate of sales activity and there were 4.6 months of inventory on a national basis at the end of December 2016, down from 4.8 months in November.

Home prices were up from year ago levels in nine of 11 housing markets tracked by the index but continue to vary widely by location. In the Fraser Valley and Greater Vancouver, prices continued to recede from their peaks reached in August 2016 but remained above year ago levels with growth of 27% 17.8% respectively. Meanwhile, prices climbed to new heights in Victoria and elsewhere on Vancouver Island, and in the GTA.

By comparison, home prices were down 3.7% year on year in Calgary and edged lower by 1.6% in Saskatoon, continuing their retreat from peaks reached in 2015.

Home prices were up modestly from year ago levels in Regina with growth of 5.2%, up 4% in Ottawa, up 3.3% in Greater Montreal and up 1.9% in Greater Moncton. Monthly trends suggest that prices have begun to stabilise in all of these markets except Greater Montreal, where values continue to rise modestly.

Home Prices Up Year On Year in Canada But Sales Down by 5% in December 2016 by Propery Wire