The spring season is a mixed one for Canada’s housing markets with some showing gains while others remain under pressure.
More than a year on from the introduction of mortgage stress tests, the impacts are still being felt and new measures to help buyers have not yet taken effect.
Despite some positive economic conditions, the Canadian Real Estate Association reports that activity remains at some of the lowest levels in years.
Home sales via Canadian MLS® Systems edged up 0.9% in March 2019 following a sharp drop in February while actual (not seasonally adjusted) sales activity fell 4.6% year-over-year to the weakest level for the month since 2013; and was also almost 12% below the 10-year average for March.
"March results suggest local market trends are largely in a holding pattern," said Gregory Klump, CREA's Chief Economist. "While the mortgage stress test has made access to home financing more challenging, the good news is that continuing job growth remains supportive for housing demand and should eventually translate into stronger home sales activity pending a reduction in household indebtedness.”
There are some areas where things are improving.
While sales in British Columbia, Alberta and Saskatchewan were more than 20% below their 10-year average for March, activity is running well above-average in Quebec and New Brunswick.
New listings rose 2.1% in March with new supply increasing in about two-thirds of all local markets, led by Winnipeg, Regina, Victoria and elsewhere on Vancouver Island. New listings declined in the GTA, Ottawa and Halifax-Dartmouth.
There were 5.6 months of inventory on a national basis at the end of March 2019.
The national sales-to-new listings ratio eased to 54.2% from 54.9% in February.
Prices are down
The Aggregate Composite MLS Home Price Index declined by 0.5% year-over-year in March, the first decline of that size since September 2009.
In British Columbia, prices were down on a y-o-y basis in Greater Vancouver (-7.7%) the Fraser Valley (-3.9%), and the Okanagan Valley (-0.8%). By contrast, prices rose by 1% in Victoria and by 6.4% elsewhere on Vancouver Island.
For the Greater Golden Horseshoe housing markets tracked by the index, benchmark home prices were up from year-ago levels in Guelph (+6.6%), the Niagara Region (+6.0%), Hamilton-Burlington (+3.7%) the GTA (+2.6%) and Oakville-Milton (+2.3%); but fell in Barrie and District and remained below year-ago levels (-6.1%).
Across the Prairies, supply remains historically elevated relative to sales and home prices remain below year-ago levels. Benchmark prices were down by 4.9% in Calgary, 4.4% in Edmonton, 4.6% in Regina and 2.7% in Saskatoon. The home pricing environment will likely remain weak in these cities until demand and supply become more balanced.
Home prices rose 7.6% y-o-y in Ottawa (led by a 10.4% increase in townhouse/row unit prices), 6.3% in Greater Montreal (led by an 8.1% increase in apartment unit prices) and 2.1% in Greater Moncton (led by a 12.9% increase in apartment unit prices).
"It will be some time before policy measures announced in the recent Federal Budget designed to help first-time homebuyers take effect," said Jason Stephen, CREA's President. "In the meantime, many prospective homebuyers remain sidelined by the mortgage stress-test to varying degrees depending on where they are looking to buy.