31 Mar
To lower the housing supply pressure, an increase in the number of house sellers was noted in February in different Canadian provinces. Although more sellers enter Canada’s housing market, the average prices of homes are still rising.
The results revealed by local real estate boards depicted a notable increase of new listing across major markets. Especially in the real estate markets of Calgary and Edmonton. This has led to a strong number of transactions recorded in the month of February. In other provinces, although the impact on activity was positive, it was still muted.
Furthermore, home buyers are still seeing a scarcity of supply which has put fierce upward pressure on the housing prices. The local real estate boards noted that Fraser Valley, Toronto, and Vancouver showcased considerable leaps in prices from their already sky-high levels in January.
The Royal Bank of Canada highlighted that a major role will be played by sellers in shaping the real estate market in the spring. The current housing market situation has provided significant advantages to homeowners who plan to sell their properties. This is because the interest rates have increased, with predictions that it will increase further in April. The average prices of homes are rising, and they can benefit on the increased value of their property. By capitalizing on such benefits, some of the supply restraints could be eased, boosting near-term activity and reducing the pressure on home prices. On the other hand, if the number of sellers does not increase materially, then the recent price hikes are likely to persist, unless the interest rates are increased in order to slow down housing demands.
Robert Hogue from the Royal Bank of Canada highlighted that, “One month does not make a trend but if February is any indication, more sellers may be (finally) making their way into Canada’s housing market,”. Further revealed by Hogue, he said, “We expect the next few months to tell much about the further direction of the market and prices,”.
Toronto has now become Canada’s most expensive market, its MLS Home Price Index increased by 6.4% from January which is more than an $80,000 increase in one month. In addition, prices have risen by 35.9% since February 2021. In Vancouver, the prices increased by 4.6% since January and increased by 20.8% as compared to last year. Also, in Calgary the MLS Home Price Index climbed 5.9% between January and February and also increased its new listings by 69% compared to the previous month. Nevertheless, a 6% drop in resales along with 12% rise in new listing of houses could represent the first step towards a more balanced market in the future.
The International Housing Affordability reported that Vancouver has now become the third least affordable market in the world, behind Hong Kong and Sydney. They also revealed that the severe housing affordability in Vancouver has spread to smaller markets of Chilliwack, the Fraser Valley, Kelowna, and the markets located on Vancouver Island.
