Canada home prices decline with uncertainty holding back buyers

[OTTAWA] Canadian home prices dropped in February as lingering economic uncertainty forced sellers to offer bigger discounts to reluctant buyers.

The benchmark price of a home in the country fell 0.6 per cent from the month before to US$483,000, continuing a string of declines, data from the Canadian Real Estate Association show. 

That period coincided with the outbreak of an ongoing trade war with the US, Canada’s largest trading partner. Though the majority of Canadian exports to the US have so far been exempt from higher levies by a preexisting trade agreement, that deal is up for review this year, stoking the anxiety that’s already affecting Canada’s economy. 

Meanwhile, the war in Iran has led to a spike in energy and other costs, making the economic outlook more uncertain. 

Across Canada’s housing market, the prospect of continued economic turmoil may be making buyers and sellers more wary. Transactions fell 1.3 per cent in February from the previous month, while new listings dropped 3.9 per cent, according to the real estate association. 

The Bank of Canada hasn’t hinted at further interest-rate cuts, and the number of homes listed for sale is 3.7 per cent higher than a year ago. That’s given buyers who remain in the market both the leverage and incentive to keep pushing for lower prices.

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“They’ve had to wait a long time for mortgage rates to find a bottom,” Shaun Cathcart, the real estate board’s senior economist, said in a statement. “But some will no doubt continue to hold off for a bottom in prices in some Ontario and British Columbia markets.” BLOOMBERG