The heat in some of Canada’s housing markets is getting wider and deeper according to a new report from RBC Economics.
Its report shows that gains in sales over recent months continued in March with two thirds of markets increasing sales month-over-month and three quarters posting higher resales than a year earlier.
There were monthly gains for markets including Toronto, Vancouver and Montreal while Calgary and Edmonton reversed a four-month trend by posting declining sales.
RBC’s economists note that supply has increased in some markets but also that prices are continue to rise rapidly in Southern Ontario with all populated areas of the province facing higher risks of rising becoming less affordable.
Robert Hogue, RBC Economics senior economist says that the federal government’s measures to tighten access to mortgages appears to have made little impact.
“Since the new rules were implemented last fall, home resale activity barely flinched at all in some of Canada’s hottest markets in Southern Ontario. In other markets, such as Montreal and Ottawa any slowing has been modest and temporary at best. And in
Vancouver—which was in the midst of a significant cooling when the federal rule changes were announced—there have been early signs in the past couple of months that the market heat may be on its way back,” Hogue wrote.
He concluded that policy to address the sharp rise in prices in Ontario should be tackling both supply and demand issues but also reigning in expectations of price rises.
The suite of policy measures “must be credible and send a strong message to all stakeholders about the future direction of prices,” Hogue says.