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Canada home resales drop again as rates rise -real estate group


Reuters

UPDATE 2-Canada home resales drop again as rates rise -real estate group


(Adds Toronto and Oakville data in third paragraph)
    By Andrea HopkinsOTTAWA, July 17 (Reuters) - The resale of Canadian homes
fell 6.7 percent in June from May, the largest monthly drop
since 2010 and the third straight monthly decline as sales in
Toronto plunged, the Canadian Real Estate Association said on
Monday.
    The industry group said actual sales, not seasonally
adjusted, slumped 11.4 percent from June 2016, while home prices
surged 15.8 percent from a year earlier, according to the
group's home price index.
    Prices in and around Toronto, Canada's largest city, led the
monthly decline in CREA's home price index, with Toronto prices
falling 0.7 percent in the month and prices in nearby
Oakville-Milton down 3.6 percent. Compared to a year ago,
Toronto prices are up 25.3 percent.
    CREA said changes to housing rules in Ontario, Canada's most
populous province and home to Toronto, prompted homebuyers to
wait and see how the market would react to yet another attempt
to rein in the housing boom.
    Ontario introduced a 16-point plan to douse speculation
blamed for fueling an extended housing boom. The changes
included a 15-percent foreign buyers tax similar to one imposed
in Vancouver in 2016.
    Rising interest rates, including higher mortgage rates and a
move by the Bank of Canada last week to hike its official
interest rate for the first time in nearly seven years, could
also play a role in the cooling market.
    "The recent increase in interest rates could reinforce a
lack of urgency to purchase or, alternatively, move some buyers
off the sidelines before their pre-approved mortgage rate
expires," Gregory Klump, CREA's chief economist, said in a
statement.
    He said buyers who had bought a home before selling their
existing home may also "become more motivated to reduce their
asking price rather than carry two mortgages" as the falling
market gives prospective buyers cold feet.
    The report showed new listings fell 1.5 percent in June
after two months of record listings in April and May, but sales
dropped even further, driving the sales-to-new listings ratio to
52.8 percent, considered balanced territory. The ratio had been
in the high-60 percent range just three months ago, when sellers
in Toronto could expect multiple offers or bidding wars.
    While year-over-year price gains remained in the double
digits, the rate of appreciation has slowed and the actual
national average price for homes sold in June was C$504,458($398,686), up just 0.4 percent from a year earlier, CREA said.

   ($1 = 1.2653 Canadian dollars)

 (Reporting by Andrea Hopkins in Ottawa and Fergal Smith in
Toronto; Editing by Bernadette Baum)
 ((Andrea.Hopkins@thomsonreuters.com; 613 235 6745; Reuters
Messaging: andrea.hopkins.thomsonreuters.com@reuters.net))

Keywords: CANADA ECONOMY/HOUSING (UPDATE 2)



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