Low interest rates impacting home sales, says CREA

Canadian home sale levels remain strong this summer —with only a slight decrease in the rate from May to June 2015. Markets in Greater Vancouver and Greater Toronto are shown to pervert the national home price average, with prices there being the highest in the country.

The national home sales rate declined by 0.8 per cent from May to June 2015 according to recently released statistics by The Canadian Real Estate Association (CREA). But, the market shows no signs of slowing down with May and June sale levels being the highest in more than five years.

Sale levels in June saw an increase in a number of markets such as Hamilton-Burlington and the Durham region in the GTA. Those increases were balanced out by a fall in sales within Ottawa and Montreal.

CREA President Pauline Aunger said in a press release that low interest rates are an important factor in increasing home sales in the summer months. Yet, she said some regions benefit more from low interest rates than others.

“All real estate is local, with trends affected by a combination of local and national factors,” she said.

A strong demand for housing in the GTA combined with a lack of listings contributes to an increase in home prices, said Gregory Klump, CREA’s chief economist in the same press release. CREA’s recently released statistics also showed that The MLS Home Price Index (HPI) rose 5.43 per cent year-over-year in June,.

Statistics also showed a national sale price increase of 9.6 ($453,560) per cent on a year-over-year basis in June. With the exclusion of Greater Vancouver and Greater Toronto, the increase appears much more modest at a growth of 3.1 per cent.

“Low interest rates are helping sales activity set new records in and around the Greater Toronto Area, which is boosting national sales activity,” said Klump,

Sales levels (not seasonally adjusted) for June rose year-over-year, being 11 per cent higher than June 2014, and 14 per cent higher than the 10-year average for June. For two-thirds of all local markets, sales levels (not seasonally adjusted) were up on a year-over-year basis.

The Canadian Housing Market remains balanced overall, with a sales-to-new listing ratio between 40 and 60 per cent, with costs hovering above and below the average level. Half of all local markets were within this range in June. One-third of local markets surpassed a 60 per cent mark, which included areas like British Columbia and the GTA.

As well, CREA discussed the number of months of inventory in a press release — which describes the amount of time it would take for current inventories to be completely liquidated at the current sales rate. On average there was 5.6 months of inventory nationally by the end of June, which remained stagnant from previous readings in May 2015. CREA said these ratings were the lowest seen in three years.

What kinds of properties are seeing the largest gains in price? Two-storey single family homes come out on top, with the highest year-over-year gains of 7. 65 per cent. With other kinds of homes, single-family homes saw a 4.43 per cent increase closely followed by townhouse/row units which saw gains of four per cent. Apartment sales saw a small increase of 2.64 per cent.

Both Greater Vancouver and Greater Toronto saw high year-over-year price gains at 10.26 per cent and 8.94 per cent respectively. Markets such as Fraser Valley, Victoria and Vancouver Island saw smaller year-over-year gains of four per cent.

A slow-down is seen in Calgary, with a year-over-year increase of 0.48 per cent this June. Indicating the smallest gains in almost four years, Calgary’s rates correlate with a full year of rates decreasing.

By comparison, Saskatoon and Ottawa’s rates remained steady year-over-year while Greater Montreal saw a slight rise. Regina and Greater Moncton saw prices fall at three percent and two per cent.

 

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