oronto and almost two thirds of local markets across Canada led a trend in sales that pushed activity down 2.1 per cent nationally in July from the previous month, the Canadian Real Estate Association said Tuesday.
The Ottawa-based group, which represents about 100 real estate boards across the country, said provincial government rules to cool the housing market in Ontario continue to hang over the region’s Greater Golden Horseshoe, but a Bank of Canada interest rate hike of 25 basis points last month probably pushed buyers to act.
“July’s interest rate hike may have motivated some homebuyers with pre-approved mortgages to make an offer,” said Andrew Peck, president of CREA, in a statement. “Even so, sales activity continued to soften in the GGH. Meanwhile, sales and prices in Montreal continue to strengthen.”
Municipalities around Toronto have seen a sharp drop in sales and prices following implementation of a 15 per cent non-resident speculation tax in April, but there are indications the market is beginning to absorb the impact of the tax.
“July marked the smallest monthly decline in GGH home sales since Ontario’s Fair Housing Plan was announced,” said Gregory Klump, chief economist, with CREA. “This suggests sales may be starting to bottom out amid stabilizing housing market sentiment. Time will tell whether that’s indeed the case once the transitory boost by buyers with pre-approved mortgages fades.”
Actual (not seasonally adjusted) activity in July was down 11.9 per cent from a year ago but there is some room for optimism based on the fact newly listed homes slipped further by 1.8 per cent in July from June, led by the GTA.
“Many other markets in the GGH region have also seen new supply pull back recently after having jumped immediately following the Ontario government’s announcement,” CREA said.
Last month’s sales decline was about one-third of those in May and June but still leaves activity 15.3 per cent below the record set in March.
The national sales-to-new listings ratio was 53.5 per cent, about the same as June and considered a balanced market. The ratio was in the high-60 per cent range in the first quarter of 2017, making for a seller’s market.
Across the country, the national average sale price was $478,696, down 0.3 per cent from a year ago. Toronto and Vancouver, even at depleted sales levels continue to impact national prices. Without those two markets, the national average price was $381,297 last month.
CREA’s benchmark house index price for July for Canada was $607,100, a 12.86 per cent increase from a year ago but year over year gains have been declining since the Ontario April tax change.