Residential property sales in Canada fell sharply in January 2018 after reaching the highest monthly level on record in December 2017, the latest real estate index shows.

Transactions were down by 14.5% month on month and are 2.4% below where they were a year ago with the number of newly listed homes for sale also falling strongly, down 21.6% month on month.

The data from the Canadian Real Estate Association (CREA) also shows that prices have held up, rising by 2.3% year on year to an average of $481,500, but overall annual price growth is slowing.

And although activity retreated to the lowest monthly level in three years, January sales were on par with the 10 year monthly average. But it was down in three quarters of all local markets, including virtually all major urban centres.

Many of the larger declines in percentage terms were posted in Greater Golden Horseshoe (GGH) markets, where sales had picked up late last year following the announcement of tighter mortgage rules coming into effect in January.

By contrast, sales were up on a year on year basis in the Lower Mainland of British Columbia and Vancouver Island, the Okanagan Region, Edmonton, Montreal, Greater Moncton and Halifax-Dartmouth.

‘The piling on of yet more mortgage rule changes that took effect starting New Year’s Day has created homebuyer uncertainty and confusion,’ said CREA president Andrew Peck.

‘At the same time, the changes do nothing to address government concerns about home prices that stem from an ongoing supply shortage in major markets like Vancouver and Toronto. Unless these supply shortages are addressed, concerns will persist,’ he added.

The decline in January sales provides clear evidence that the strength in activity late last year reflected a pull forward of transactions, as rational home buyers hurried to purchase before mortgage rules changed in 2018, according to Gregory Klump, CREA’s chief economist.

‘At the same time, a large decline in new listings prevented market balance from shifting in favour of home buyers,’ he added.

Annual price growth has now fallen for nine months in a row but it was the smallest since December 2015, the index data also shows. It largely reflects trends among GGH housing markets tracked by the index. While prices in the region have largely stabilised in recent months.

Steep Fall in Home Sales in Canada in January 2018 by Property Wire