The recent decline in Canadian real estate prices and tougher regulations that will take effect on January 1 are impelling sales.
Brokers reported a 3.9% jump in transactions in November, the Canadian Real Estate Association said in its data release late last week. This represented the second biggest increase in two years, as well as the fourth consecutive rise in transactions (the longest streak since early 2016).
Canadian home prices have moderated in the second half of 2017, after various levels of governments took steps to cool things down. The country’s main banking regulator introduced stress tests for mortgages last month, and buyers may be rushing to get into the market before those rules kick in at the start of 2018.
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Prices fell for six straight months, including November, the longest such run in almost a decade. The average price of a house sold in Canada last month was $513,433 on a seasonally adjusted basis.
“National sales momentum remains positive heading toward year-end,” CREA chief economist Gregory Klump stated, as quoted by Bloomberg. “It remains to be seen whether stronger momentum now will mean weaker activity early next year once new mortgage regulations take effect beginning on New Year’s day.”
The November sales gain was driven by a 16% increase in Toronto transactions, where prices have fallen 8.8% over the past six months. Meanwhile, prices in Vancouver were up 0.4% in November and have gained 6.7% since May.
National home prices were down 0.2% in November and have fallen 2.7% over the past six months.
Canadian housing starts surge in November – CMHC