Canadian Housing Market: How 2019 has begun
Canadian Housing Market Preview
The year 2018 was a year of ups and downs for the Canadian housing market. Where the condo market heated up and mortgage prices became lucrative, several regions in Canada became less and less affordable for prospective home owners. Set against that backdrop, 2019 for real estate has been to a fresh start. Here is an analysis of the Canadian Housing Market and how the year 2019 has begun for the buyers and sellers in this market.
What happened to Prices?
The beginning of the year saw a slowing down of housing price index by about 0.1% (as per Teranet-National Bank National Composite House Price Index). The sharpest decline in home prices was experienced in Western Canada, especially in regions like Edmonton (-0.8%), Calgary (-0.5%) and Vancouver (-0.3%). However, despite the slowing down of Housing Price Index, the prices still remained very near to their historically highest points.
Some markets like Montreal (0.2%), Toronto (0.1%) and Winnipeg (0.1%) had mildly positive housing price index, whereas Halifax (0.7%) and Quebec City (1.3%) gained housing price substantially above market average. But despite the price upswing in these markets, the national average remained negative.
How it affected Sales?
A negative or slowed down price index for housing has given a slight upturn to the sales, compared with the sales of December 2018. According to the Canadian Real Estate Association (CREA), the beginning of 2019 saw an improvement of 3.6% in monthly sales over the sales of December 2018. However, these figures still remained below previous year’s January performance.
As per CREA, a total of 23,968 properties were sold through the Multiple Listing Service, which was actually a drop in the Sales to New Listings Ratio (SNLR) across the country. Regions like Fraser Valley (24.2% SNLR drop compared to last year), Vancouver (22.9% SNLR drop) and Calgary (8.5% SNLR drop), experienced huge drop in their SNLR, affecting national average.
Against such bleak backdrop, certain regions in eastern Canada, such as Montreal (with SNLR of 70.1%), Ottawa (with SNLR of 70.1%) and Quebec City (with SNLR of 52.6%) were the only ones that showed promise and outperformed the national SNLR average of 54.3%.
Impact on Housing Starts
With pricing and sales performance indicating a slow start, the overall performance of the Canadian Housing Market can be labeled as slow. As things have picked up from where they were in December 2018, the Canada Housing and Mortgage Corporation (CHMC), has indicated that the sector performance is better than the forecasted figures.
With 44,559 units of single detached units sold, the urban starts for the same slumped to 10.4%. On the other hand, with 146,353 units of multi unit projects (such as condos, town houses, apartments, etc.) sold, the urban starts for the same increased by 0.7%. The overall annual pace of urban start slowed down to about 2.1%.
With projected increase in borrowing costs, the pre-construction sales of new homes are expected to remain low and the CMHC expects an overall slow performance of Canadian Housing Market. But as certain regions start performing better than the forecasts, year 2019 may still be in for an upswing.
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