National home sales fell 1.3% from June to July, the Canadian Real Estate Association said Monday.

National home sales fell 1.3% from June to July, the Canadian Real Estate Association said Monday.
Photo Credit: PC / Sean Kilpatrick

Canadian home sales decline again in July

National home sales declined for a third consecutive month in July 2016, according to statistics released today by the Canadian Real Estate Association (CREA).

Sales in July have declined by 1.3 per cent, said Gregory Klump, CREA’s Chief Economist. With three consecutive monthly declines, national sales activity in July came in 3.9 percent below the record set in April 2016, he said.

“The reason for that is that sales are softening in the Lower Mainland of British Columbia, a very active and pricey area in Canada,” Klump said in an interview with RCI.

(click to listen the full interview with Gregory Klump)

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Sales in British Columbia’s Greater Vancouver Area and the Fraser Valley, Canada’s hottest real estate markets, have been softening since they peaked in February and that’s helping to pull the national sales figures lower, Klump said.

Transactions in these two markets have dropped by 21.5 and 28.8 per cent respectively since February, according to CREA.

“This suggests that sales are being reined in by a lack of inventory and a further deterioration in affordability,” Klump said. “The new 15 per cent property transfer tax on Metro Vancouver home purchases by foreign buyers took effect on August 2nd, so it will take some time before the effect of the new tax on sales and prices can be observed. That said, the new tax will do little in the short term to increase the supply of homes.”

Prices continue rising in BC and Ontario
 Downtown Vancouver is seen in the background as a house sits on top of a small island in West Vancouver, B.C., on June 10, 2013. Vancouver is the second most unaffordable housing market in the world after Hong Kong, according to a new study of major property markets.
Downtown Vancouver is seen in the background as a house sits on top of a small island in West Vancouver, B.C., on June 10, 2013. Vancouver is the second most unaffordable housing market in the world after Hong Kong, according to a new study of major property markets. © PC/JONATHAN HAYWARD

Yet despite the declines in home sales, home prices in Greater Vancouver, the Fraser Valley and the Greater Toronto Area continue to climb.

“That’s because you’ve got a very tight balance between supply and demand,” Klump said. “Whenever you’ve got a short supply of home listings and strong demand, you’re going to get price increases. And that’s what we’re seeing there.”

The national average price for homes sold in July 2016 was $480,743, up 9.9 per cent year-over-year, according to CREA statistics.

Two-storey single family home prices registered the biggest price gains (+15.9 per cent), followed by townhouses (+15.3 percent), one-storey single family homes (+14.3 per cent), and apartment units (+11.1 per cent), said the CREA report.

The report noted that Greater Vancouver (+32.6 per cent) and the Fraser Valley (+37.6 per cent) posted the largest gains, followed by Greater Toronto (+16.7 per cent), Victoria (+17.5 per cent) and Vancouver Island (+11.6 per cent). By contrast, prices were down -4.2 percent and -1.5 percent in Calgary and Saskatoon respectively, said the report.

Home prices rose modestly in Regina (+2.7 per cent), Greater Montreal (+1.8 per cent) and Ottawa (+1.1 per cent).

However, if British Columbia and Ontario are removed from the average price calculation, there has been a decline of two-tenth of a per cent in average prices and the housing market prices have been in a small negative territory for the last twenty months, Klump said.

“This strong price growth story is really a story about the Greater Toronto Area and the environs, and the Lower Mainland of British Columbia, as well as selected other markets in the province,” Klump said. “Elsewhere in Canada you have a pretty steady as she goes sales activity and prices, either flat or declining.”

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