CANADIAN home sales rose in December for the first time in six months as buyers were spurred into action by expectations that borrowing costs will fall this year.

The number of homes trading hands rose 8.7 per cent from the previous month – the first gain since June, according to data released on Monday (Jan 15) by the Canadian Real Estate Association.

The national benchmark home price was C$730,400 (S$724,897.60), down 0.8 per cent from November on a seasonally adjusted basis and up less than 1 per cent from a year earlier.

The turnaround in activity last month comes as some of the financial pressures that have held back home buyers are easing.

Traders expect Canada’s slowing economy will force the central bank to trim its overnight rate, and bond yields fell sharply in November and December, causing the cost of the fixed-rate mortgages priced off them to come down in turn.

Lower home prices, combined with rising wages, are also making purchases more appealing for some households. The national benchmark price is about 13 per cent below its peak of early 2022.

A NEWSLETTER FOR YOU

Tuesday, 12 pm

Property Insights

Get an exclusive analysis of real estate and property news in Singapore and beyond.

Sign Up

For the full year, home sales fell 11.1 per cent to 443,511 units, making 2023 the slowest year since 2008, the real estate group said.

In its forecast for this year, the board said it expects the number of sales to rise 10.4 per cent from last year’s level, as lower interest rates spur more activity in the market.

“Home affordability has reached long-time lows in Canada, in part due to higher policy rates. With mortgage rates poised to reset over the next few years, the risk of a policy misstep is rising, ” says Stuart Paul, Bloomberg economics.

“The Bank of Canada (BoC) can cut interest rates to prevent a consumption slowdown, but that could spark home price increases and shelter-driven inflation. Alternatively, maintaining a higher-for-longer posture to lean against a housing bubble creates downside risks for growth. Ultimately, we expect the BoC to cut rates by 100 basis points in 2024 as activity slows, re-energizing home price growth down the line. “ BLOOMBERG