Home prices in Canada are falling

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The price of a resale home in Canada fell 1.8% in June from a year ago, the first annual decline since May 2020, as the market continued to cool sharply from the peak of February amid tighter borrowing conditions, data from Canadian real estate agents showed Friday.

Canada’s national average sale price fell to CA$665,850 ($511,092) in June, from CA$678,280 in the same month of 2020, according to data from the Canadian Real Estate Association. Prices are down 6.4% on the month and 18.5% from the February high.

“The June housing data shows a seriously shaky market, and that was before the Bank of Canada’s 100 basis point (basis point) knockout,” said Robert Kavcic, senior economist at BMO Economics. , in a note, adding that an even deeper correction is yet to come.

The Bank of Canada surprised Wednesday with its huge hike, raising the key rate from 1.5% to 2.5%. It has risen four times this year in a bid to keep inflation under control, with money markets betting on rates reaching 3.5% by the end of the year.

Home sales in Canada fell 5.6% in June from May and are down 23.9% year-over-year, led by Canada’s largest cities, the Office said. AIT.

“Commercial activity continues to slow in the face of rising interest rates and uncertainty,” said Jill Oudil, president of the ACI. “The cost of borrowing has overtaken supply as the dominant factor affecting housing markets right now.”

The frenzy of early 2022 has faded, with sales down 19% in the second quarter compared to the first. New listings rose 4.1% in June and the sales-to-new listings ratio hit its lowest level since 2015.

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