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Average Canadian home price jumps 17% year-over-year

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Sales of existing homes in Canada rebounded in January from December as strong demand in Toronto and Vancouver offset declines in Calgary and Edmonton, a report from the Canadian Real Estate Association showed on Tuesday.

The industry group for Canadian real estate agents said sales activity was up 0.5 per cent last month from December. Actual sales for January, not seasonally adjusted, rose 8 per cent from January 2015.

Canada’s two largest markets, Toronto and Vancouver, have experienced a long housing boom, leading to concerns about a bubble.

A slump in oil prices has cooled markets in Alberta and Saskatchewan, while others have plateaued.

“January 2016 picked up where 2015 left off, with single-family homes in the (Greater Toronto Area) and Greater Vancouver in short supply amid strong demand standing in contrast to sidelined home buyers and ample supply in a number of Alberta housing markets,” said CREA Chief Economist Gregory Klump.

He said a rule change that doubled the minimum down payment for insured mortgages on more expensive homes, to 10 per cent from 5 per cent on the portion of a property’s value between $500,000 and $1-million, could cool the market in the months ahead. The change took effect on Monday.

“(The change) may shrink the pool of prospective home buyers who qualify for mortgage financing,” Klump said.

The federal government tightened the mortgage rules in an effort to cool activity in hot markets without slamming on the brakes on those that are already slowing.

The CREA report showed the national sales-to-new-listing ratio rose to 59.2 per cent in January as the number of new listings fell 4.9 per cent. A ratio between 40 per cent and 60 per cent is consistent with balanced market conditions, with readings above 60 indicating a sellers’ market.

There were 5.3 months of inventory at the end of January, down from 5.4 months in December and the lowest level of supply in nearly six years, CREA said.

The national average price for homes sold in January was $470,297, up 17 per cent from a year earlier.

CREA’s home price index, which helps adjust for the outsized increases in Toronto and Vancouver, rose 7.7 per cent from January 2015.

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