Canadian real estate is increasingly becoming a seller’s market as supply shrinks to decade lows, raising the prospect of rising prices and the re-emergence of froth in some major cities.
New listings in areas such as Toronto, GTA and Ottawa declined sharply at the end of last year, resulting in the fewest homes available for sale in 12 years, the Canadian Real Estate Association reported. As a result, prices are rising nationally at the fastest pace since 2017.
December 2019 residential sales reported through TREB's MLS® System were up by 17.4 per cent year-over-year to 4,399. Total sales for calendar year 2019 amounted to 87,825 – up by 12.6 per cent compared to the decade low 78,015 sales reported in 2018. On an annual basis, 2019 sales were in line with the median annual sales result for the past decade.
The data suggest the recent housing-market rebound, which had been mostly welcomed after a rough 2018, may now be entering a more perilous phase, particularly after regulators took significant steps to deflate some of the country’s most expensive markets. The development hasn’t gone unnoticed among policy makers. Last week, Bank of Canada Governor Stephen Poloz highlighted the need to keep an eye on the market for any return of speculative activity.
the number of new listings entered into TREB's MLS® System was down by 2.4 per cent year-over-year.
“The current tightness of the market looks real,” chief economist at Bank of Montreal, said in a note. “As a result, we expect some further upward pressure on prices in coming months, and some further upward pressure on household debt to flow from that.”
New listings in Canada were down 2.4 per cent in December and are 8% below the 2019 high reached in April, while the sales-to-new listings ratio is the highest since 2004, CREA reported.
"Over the last ten years, TREB has been drawing attention to the housing supply issue in the GTA. Increasingly, policy makers, research groups of varying scope and other interested parties have acknowledged that the lack of a diverse supply of ownership and rental housing continues to hamper housing affordability in the GTA. Taking 2019 as an example, we experienced a strong sales increase up against a decline in supply. Tighter market conditions translated into accelerating price growth. Expect further acceleration in 2020 if there is no relief on the supply front," said, TREB's Chief Market Analyst.
The average selling price in December 2019 was $837,788 – up almost 12 per cent year-over-year. For calendar year 2019, the average selling price was $819,319 – up by four per cent compared to $787,856 in 2018.
Even with the recent slowdown, national home sales for all of 2019 rose 6.5 per cent from the previous year, reflecting stronger demand from lower interest rates, a strong labour market and rising population.
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