The housing market in Canada continues to surge and has reached new record sales in April this year. This is so far the busiest season for home sales as per history records. Despite the 13% increase in house prices by the latter part of April, the Canadian Real Estate Association (CREA) is confident that the sales will continue to soar; many are still buying Montreal condos. According to CREA, the increase in the index is the highest in the past six years.
Today’s average house price is $508,097 but it is still essential to highlight that there are existing variances in different regions. The growth in sales was highly due to two large housing markets namely Vancouver and Toronto. CREA also emphasized that the new housing phenomenon has caused a year-over-year gain reduction of about 8.7% while the national average has plummeted to $369,222.
For instance, this year alone, the index of the Greater Vancouver Area is up by staggering 25.3 %. Houses in Vancouver Island also rose by as much as 8.2%. Victoria and the Fraser Valley also demonstrated an increase by 12% and 12.6% respectively.
Removing Vancouver and Toronto in the scenario, there has been a notable boost in sales volume as well. This has led to market gains in as much as 70% of all the areas. Contrary to the growth experienced by other regions, Vancouver and Toronto have both failed to demonstrate a substantial increase in sales.
Sales in these regions have slowed down since the implementation of new mortgage rules back in February. Moreover, there was a stagnant sales trend in March and April in Toronto, whereas a decrease of 1% in sales was seen in Vancouver. However, due to limited supply in these two regions, prices remain costly.
Despite the massive increase in sales in the rest of the country, economist Robert Kavcic of the Bank of Montreal also emphasized that the numbers are misleading, as they tend to conceal the wide variances experienced by every region all across Canada. According to Kavcic, only six regions out of 26 demonstrated a two-digit price gain in April, while ten of these regions suffered decline. The rest only experienced gain of 1.4 %.
The surge in sales based on the total national sales has prompted for inventory to be the minimum level of 4.7, the lowest in the past six years. This figure generally represents the time span for a house that has been on the market to be sold. This means that in less than five months, a house can already be sold.
At present, there is still an on-going increase in sales in the Canadian housing market, where Toronto and Vancouver are now at the peak. There have been corrective measures applied to markers considered as oil-exposed. Prices are also expected to rise until the end of the year, with the short supply still a problem in areas such as Toronto and Vancouver. Furthermore, it seems that the policymakers are not keen on testing the water at this time.