The Canadian housing market hit a new record with more properties changing hands in March than any month in history, as sky-high prices lured more homeowners to try to cash in.
The number of homes sold across the country rose 5.2 per cent on a seasonally adjusted basis, according to data released Thursday by the Canadian Real Estate Association. The 76,000 houses that were sold was 14,000 more than the previous monthly sales record set last July. Benchmark home prices rose 3.1 per cent from the previous month, adding to a record gain in February as more supply hit the market.
The continued strength in the market comes amid a debate in Canada over whether a housing bubble is building and what policy makers should do about it. Last week, Canada’s banking regulator said it will examine whether to setup a new benchmark interest rate used to determine whether people can qualify for uninsured mortgages, and Prime Minister Justin Trudeau’s government has said it is looking to impose a tax on foreign, non-resident homeowners. Some economists have argued these steps aren’t enough, though March’s increase in supply may ease some of these concerns.
“Now is a good time to talk about pent-up supply, which may be the answer to the question everyone is asking right now,” Shaun Cathcart, the real estate association’s senior economist, said in a press release. “As the uncertainty caused and danger posed by COVID wind down, some owners who would not sell during a global pandemic will emerge with properties for sale, while at the same time some of the urgency on the demand side could dissipate.”
The increase in supply saw the rate at which newly listed properties are sold fall to 80.5 per cent from a peak of 90.9 per cent in January, though still well above the long-term average of 54.4 per cent, the real estate association said. Another measure of the balance between supply and demand, the number of months of housing inventory available, was at 1.7, the lowest on record.