Canada’s housing market slowed for the fifth consecutive month in July, as home sales volumes declined significantly and typical home prices fell 6% from February’s peak, marking the largest decline since the financial crisis of 2008-2009.
The national home price index fell 1.7% to $789,600 from June to July on a seasonally adjusted basis, according to the Canadian Real Estate Association (CREA). It follows a record monthly decline of 1.9% from May to June. From April to May the index fell 0.8% and from March to April it fell 0.6%. From February to March, it decreased by 0.18%.
Suburbs and less populated cities in Ontario and British Columbia have lost the most value since the market peak. These are all areas that saw prices soar in the first two years of the COVID-19 pandemic, when residents took advantage of historically low interest rates and fled cities in search of more money. ‘space.
In the Oakville-Milton area of Ontario, an affluent region west of Toronto, the house price index fell 17% on a seasonally adjusted basis from February to July. The price of a typical house has lost $266,000 during this period. In Mississauga, a major urban center bordering Toronto, the home price index fell 13%. In Brantford and Barrie, the price of a typical house fell by 14% and 9%, respectively.
In the Chilliwack region of British Columbia and in the Fraser Valley, the index decreased by 9% and 8%, respectively.
Since peaking in February, the national house price index has fallen 6%. This is the largest five-month decline since the financial crisis. And that doesn’t fully reflect the impact of the Bank of Canada’s last interest rate hike in mid-July, when the central bank raised its benchmark rate by one percentage point to 2.5%. .
‘Forward and down for now,’ Robert Kavcic, senior economist at Bank of Montreal, said in a note to clients, adding July resale numbers don’t ‘fully reflect’ the latest rate move. of interest.
Kavcic and other private sector economists expect house prices to fall further as borrowing is set to become more expensive with the Bank of Canada’s plan to keep raising interest rates to fight back. against soaring inflation.
He predicts the national house price index will fall as much as 20% between February’s peak and next year.
Nationally, sales volume fell 5.3% from June to July, with activity down in about three-quarters of the country. In the previous month, resales had fallen 5.6%.
Areas that continue to see significant declines in activity are Toronto and Vancouver – Canada’s two most expensive markets – as well as the Fraser Valley, Calgary and Edmonton.
At the same time, the number of new listings fell 5.3% – a sign, according to CREA, suggests that home sellers are waiting on the sidelines.
Compared to July of last year, the house price index increased by 10.9%. This is a much smaller increase than in January and February, when the year-over-year increase in the price index was almost 30%.
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