Canadian home sales fall for second month while prices creep higher
CANADIAN home sales fell for a second month as the Bank of Canada’s renewed interest-rate hikes begin to force buyers from the market, even as an ongoing shortage of homes propped up prices.
The number of homes trading hands across the country declined 4.1 per cent in August from July, according to seasonally adjusted data released on Friday (Sep 15) by the Canadian Real Estate Association. The benchmark home price continued to rise, inching up 0.4 per cent from the previous month to C$757,600 (S$762,651), the data show.
Canada’s housing market surged back to life earlier this year after the central bank paused its campaign of interest-rate hikes. But with home prices and inflation starting to pick back up, the Bank of Canada was forced off the sidelines once more, enacting back-to-back rate hikes in June and July. The central bank held rates steady earlier this month, while keeping the door open to further increases.
“August was the first full month of housing data following the Bank of Canada’s July rate hike, so a dip in activity was expected,” Shaun Cathcart, the real estate board’s senior economist, said in a statement. “The demand is obviously still there, and it will be back, but as the housing affordability crisis re-emerges as a top policy issue, for now, the slowdown on the buyer side should help keep a lid on prices.”
August’s home-price gains was only about half as large as the increase in July, according to the the real estate board. The deceleration may be due to an uptick in new listings, which rose 0.8 per cent in August. After a 24 per cent increase between March and July, the flow of properties reaching the market is now closer to its long-term average.
But the Canadian housing market is still showing signs of being under-supplied. It would take 3.4 months to clear all the homes on the market at the current rate of sales, compared with the long-term average of about five months, the data show.
This shortage of homes, and the resulting high cost to both rent and buy, is fast becoming a national political issue. On Thursday, Prime Minister Justin Trudeau pledged to cut the federal sales tax on construction of new apartment buildings as part of a promised suite of measures to address affordability issues. BLOOMBERG
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