The Canadian Real Estate Association (CREA) released its monthly national housing market report for April 2018, announcing a big drop in sales.
From March 2018 to April 2018, national home sales fell 2.9%. On a year-over-year basis, this is a 13.9% drop, bringing sales activity to its lowest in five years (nearly 7% below the 10-year average).
Representatives from the CREA blame the stress test that kicked in at the beginning of this year.
“The stress test that came into effect this year for homebuyers with more than a 20% down payment continued to cast its shadow over sales activity in April,” says CREA President Barb Sukkau. “Its impact on housing markets varies by region.”
“This year’s new stress test has lowered sales activity and destabilized market balance for housing markets in Alberta, Saskatchewan and Newfoundland and Labrador provinces,” adds Gregory Klump, CREA’s Chief Economist. “This is exactly the type of collateral damage that CREA warned the government about. As provinces whose economic prospects have faced difficulties because they are closely tied to those of natural resources, it is puzzling that the government would describe the effect of its new policy as intended consequences.”
While the month-to-month drop in sales was strongly led by Fraser Valley, Calgary, Ottawa, and Montreal, the significant year-over-year drop was led by Lower Mainland British Columbia and the Greater Golden Horseshoe (GGH).
New listings also dropped by 4.8% from March to April, down to a nine-year low for the month. This is also 12% lower than the 10-year monthly moving average. Though listings were down, national inventory came in at 5.6 months, the highest supply has been since September 2015. The long-term average is 5.2 months.
The national average selling price fell 11.3% year-over-year to just over $495,000. As usual, the Greater Toronto Area (GTA) and Vancouver skewed the average. Remove these areas from the equation and the average selling price comes in at $386,100, which is a 4.1% drop compared to last year.
Apartment units and townhomes saw strong price growth year-over-year on a national level, jumping 14.7% and 6.5%, respectively. Price growth for one-storey single-family homes fell 1.1%, while two-storey single-family homes dropped 4.8%.
In the GGH, home prices stabilized and began to trend higher, but compared to record high prices last year, price growth lagged. In Guelph, price growth remained stronger than last year, increasing 5.9%. The GTA slowed by 5.2%; the Oakville–Milton area fell 8.7%; and the Barrie area dropped 8.4%.
Around this time last year is when the psychological effects of the Fair Housing Plan started impacting real estate activity. It’ll be interesting to see the year-over-year comparisons for May 2018 and the following months.