The residential real estate market ended 2012 in a stable condition with national prices up year on year and sales down due to changes in mortgage lending rules. The latest data from the Canadian Real Estate Association (CREA) shows average prices were up 1.6% year on year in December while national homes sales fell by 0.5% compared with the previous month.
It means that actual, not seasonally adjusted activity is down 17.4% compared with December 2011 and CREA said that this was due to a slowing in demand since August when mortgage lending rules were tightened.
While sales activity was little changed nationally, it picked up in just over half of all local markets in December. ‘National sales activity continues to hold fairly steady at lower levels since mortgage rules were changed earlier in 2012, but there are still some real differences in trends between and within local housing markets,’ said CREA president Wayne Moen.
Four of every five local markets posted a year on year decline in sales activity in December although Calgary remained a notable exception, with activity there having risen 7% year on year. CREA also said that sales were handicapped by December 2012’s five full weekends, since far fewer transactions take place on weekends. This trading day effect is among factors taken into account by seasonal adjustment.
‘Similar to what we saw in September, December sales had fewer business days compared to the same month last year and most other years. It factored into December’s year on year decline in sales activity,’ said Gregory Klump, CREA chief economist. ‘Successive rounds of tightening mortgage regulations have kept the housing market in check during what has become an extended low interest rate environment,’ he added.
The number of newly listed homes fell a further 1.3% month on month in December – combined with monthly declines of 1.1% in November and 4.1% in October, new supply reached its lowest level since March 2011. While Greater Toronto posted the largest decline, new listings were down in half of all local markets in December including Greater Vancouver, the Fraser Valley, and Vancouver Island.
Quote from PropertyCommunity.com : “Residential property sales in Canada have fallen since the introduction of new mortgage lending regulations, according to the latest analysis from the Canadian Real Estate Association (CREA).”
‘The decline in new supply may reflect purchase offers below the asking price that are made to sellers who are under no pressure to sell. Instead they choose to take their homes off the market once their listing expires. In the absence of economic stresses like a spike in interest rates or a sharp drop in employment, this dynamic can be expected to keep the housing market in balance,’ explained Klump.
The actual, not seasonally adjusted, national average price for homes sold in December 2012 came in just under $352,800, an increase of 1.6% compared with December 2011. CREA said that the national average price continues to be influenced by fewer sales in Greater Vancouver and Greater Toronto compared to the same period a year earlier. Excluding these two markets from the national average price calculation yields a year on year increase of 3.3%.
The 2012 national average price for homes sold through the MLS Systems of real estate Boards and Associations in Canada was $363,740, up 0.3% from 2011. Unlike average prices, the MLS Home Price Index is not affected by changes in the mix of sales, so it provides the best gauge of Canadian home price trends. The Aggregate Composite MLS HPI rose 3.3% year on year, the eighth time in as many months that the year on year gain shrank and is the slowest rate of increase since April 2011.