Canadian home sales declined for the first time in five months as activity in Vancouver and Toronto weakened.
Sales in Vancouver fell by 1.5 per cent in September and benchmark prices declined 1.2 per cent, the Canadian Real Estate Association said Monday. In Toronto, the nation’s biggest city, sales fell 0.5 per cent and benchmark prices rose 0.1 per cent.
Activity across the country fell by 0.4 per cent, bringing the 12-month decline to 8.9 per cent, according to the Ottawa-based realtor group. Sales fell in about half of the country’s real estate markets, with buyers and sellers still being influenced by rising mortgage rates and tougher qualification rules introduced at the start of the year, CREA president Barb Sukkau said.
Some markets nonetheless saw sales increase in September, including an eight-per-cent rise in the Fraser Valley.
Sukkau says rising mortgage rates and the new mortgage stress test will continue to influence the balance between supply and demand with most markets expected to “become even more restrictive” in months to come.
The group’s chief economist, Gregory Klump, adds that time will tell how these factors will play out for certain cities.
“In markets with an abundant supply of homes and slower sales activity, buyers have the upper hand when it comes to negotiations over price,” he said in a statement. “However, in places where buyers are keen to make a purchase but there’s a shortage of homes for sale, sellers are in the driver’s seat when it comes to price. It will be interesting to see how supply and demand respond to rising interest rates amid this year’s new mortgage stress test.”
The mortgage stress test came into effect in January, adding downward pressure on property values that were still adjusting to other newly introduced measures such as a 15-per-cent foreign-buyer tax in Ontario.
TD Economics says the report points to a more “moderate pace” for the Canadian housing market in the coming quarters.
“This is consistent with our forecast calling for resale activity to rise at a more moderate pace in coming quarters, as increasing borrowing costs and stretched affordability conditions in key markets keep a lid on demand,” bank economist Rishi Sondhi said in a note.
The real estate association says the national average price for a home sold in September was just under $487,000, up 0.2 per cent compared with a year ago.
Excluding the Greater Toronto and Greater Vancouver areas, the average price was just over $383,000.