Luxury home prices fall as global cities like NYC, Vancouver lose lustre among wealthy
Canadian housing sales took a breather as activity in Toronto pulled back, but strength in the western provinces highlights a sustained recovery at the national level.
Home sales were little changed in October after seven straight months of gains, according to data released Friday by the Canadian Real Estate Association. Toronto was a major drag, posting a 2.9 per cent decline, the biggest drop since February. Still, renewed momentum in Vancouver and Calgary were sources of strength, with sales growing 5.9 per cent and 2.1 per cent respectively. The Ottawa market continued to expand at a moderate pace, while Montreal was flat.
Residential housing has rebounded this year as borrowing costs fell and buyers adjusted to tighter mortgage rules introduced at the beginning of 2018. With markets also adapting to the impact of taxes on foreign buyers in Vancouver and Toronto, Canadian real estate activity has climbed back above its 10-year average and is contributing to economic growth.
“The solid results simply drum home the point that the housing sector has returned to the status of a growth driver, rather than the growth dimmer it had been over the past two years,” Doug Porter, chief economist at Bank of Montreal, said in a note to clients. “The related pick-up in household borrowing is a key reason that the Bank of Canada has been a bystander to the global rate-cut parade.”
Benchmark prices also continued their recovery, rising 1.8 per cent from a year earlier, with a 0.6 per cent gain on the month. Though Vancouver, Calgary and other western cities have lower prices than a year ago, central Canadian markets are tightening. Toronto’s prices are up 5.6 per cent, while Montreal’s rose 7.5 per cent. Prices in the capital city of Ottawa are up 10.3 per cent.
The sales to new listings ratio ticked up to 64 per cent, a sign markets are tilting in favour of sellers, CREA said.