A record year for canada?
Toronto, one of the biggest drivers of activity Photo: Bob Linsdell
Sales of Canadian property have hit a five-year high this summer, as the market heats up, thanks to low interest rates and high confidence.
The number of sales processed through the MLS systems of the Canadian Real Estate Association slipped in June 2015 by 0.8 per cent, but remain the strongest monthly readings in more than five years. Indeed, sales were up in June month-on-month in roughly half of all local markets, led by Hamilton-Burlington and the Durham Region of the Greater Toronto Area. The monthly increase in sales there was offset by monthly sales declines in Ottawa and Montreal.
"Low interest rates are unquestionably helping to boost consumer confidence and home sales activity this summer," comments CREA President Pauline Aunger. "But low interest rates are benefiting sales in some areas more than others."
This demand has helped to push house prices up. Acccording to the CREA, the national average sales value has risen 9.6 per cent year-on-year. Regional markets saw varying levels of growth. According to Royal LePage, the average price of a home in Canada rose between 3.9 per cent and 7.5 per cent year-over-year in the second quarter.
The detached bungalow segment had the highest national increase, rising 7.5 per cent year-over-year to $436,938, while standard two-storey homes appreciated 6.8 per cent to $471,002. During the same period, the average price of a condominium rose 3.9 per cent to $268,583.
Toronto remains one of the key drivers of the market, thanks to a strong economy and employment in the face of low supply levels.
"Those records would be even higher were it not for an ongoing shortage of listings for single family homes in the [Toronto] area," says Gregory Klump, CREA's Chief Economist. "The combination of strong demand and a shortage of listings is continuing to fuel single family home price increases."
"The robust national average home price increases that we have seen in the second quarter are heavily influenced by activity levels in Toronto and Vancouver," agrees Phil Soper, president and chief executive officer, Royal LePage. "Above average price increases aren’t going away any time soon."
Indeed, if these two markets are excluded from calculations, according to the CREA, the average property price is a more modest $346,904 and the year-over-year gain is reduced to 3.1 per cent.
Threats to the health of Canada’s real estate market in the remaining months of the year include the continued drag from oil price declines and the risk of sharper regional home price corrections if oil were to fall further, as well as further delay in anticipated export benefits from the lower Canadian dollar or a return to calamity in Europe if the tentative debt deal with Greece were to fall apart.
Nonetheless, optimism is high in the country. Royal LePage forecasts that the average price of a home in Canada will increase 6.1 per cent for the full year when compared to 2014.
"Looking to Canada as a whole, 2015 is shaping up to be a record year for housing," adds Soper.
On TheMoveChannel.com, demand has been steadily climbing all year: the country has been in the top 10 most destinations on the site for the whole of the second quarter, climbing up from ninth in the chart to become the third most popular country in June 2015 for the time.