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Although May is usually the peak month for home sales, the Canadian Real Estate Association (CREA) said on Wednesday that home sales fell sharply, down 20 per cent compared with the same period last year.
Between April 2022 and May 2022, home sales recorded by Canada’s MLS ®system fell by 8.6%. This continues to cool on the basis of the larger decline recorded in April, falling to the level of the second half of 2019, just above the 10-year average.
CREA says the slowdown means home sales are now finally back to where they were before the COVID-19 pandemic.
Sales in 3/4 of Canada’s local markets fell, led by larger census metropolitan areas (CMA), including the Greater Toronto area (GTA), the Greater Vancouver Lowland Plains, Calgary, Edmonton and Ottawa.
The number of actual (unseasonally adjusted) transactions in May 2022 was 21.7% lower than the record set in the same period last year. Sales in May 2022 were slightly more than 50000 homes, very close to the 10-year average for the month.
When the pandemic began, Canada’s property market rebounded strongly after cooling in March 2020 and April 2020, with prices and sales hitting record highs for much of the past two years.
But that momentum has changed significantly in recent months, as lending rates have begun to rise, making mortgages more expensive and weakening the purchasing power of buyers.
The average price of a house sold on its existing housing trading system MLS in May was 711000 yuan. This is down more than 13% from the all-time high of 816720 yuan set in February 2022.
“sales continued to slow in May and prices softened in many parts of the country,” said Jill Oudil, chairman of CREA.
“this situation has been anticipated and predicted for some time, and eventually sales activity slows to a more normal level and house prices flatten,” Shaun Cathcart, chief economist at CREA, said in a press release.
According to the long-term average of May 2022 above or below a standard deviation, nearly 3/4 of the local market belongs to the balanced buying and selling market, the largest figure since the fall of 2019. Slightly less than 1/4 are in the seller’s market, while a small number are already in the buyer’s market.
CREA says the average house price figure can be misleading because it is vulnerable to sales in large expensive markets such as Toronto and Vancouver.
So, unlike the Toronto Real Estate Bureau, CREA adopted another figure called the House Price Index (HPI) to track national house prices. CREA says HPI is a better market measure because it adjusts according to the number and type of housing.