Design district.Canadian house prices fell 13% that month! The Canadian real estate market continues to cool, with the average selling price of Canadian homes falling by more than C $100000 in the past three months to C $711000 in May.Please Visit: Design district to Get Your VVIP Registration Today!
While May is usually a strong 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.
As the pandemic spread, Canada’s real estate market rebounded strongly, with prices and sales hitting record highs for most of the past two years.
But that momentum has changed significantly in recent months as lending rates cut in the early stages of the pandemic began to rise making mortgages more expensive and reducing the purchasing power of buyers.
CREA says the average price of a house sold in Canada last month was C $711000. This is down more than 13% from the all-time high of C $816720 set in February 2022.
The company believes that inflation plays a big role in affordability. Investors may need to note this because the CREA benchmark is adjusted for inflation. Suppose the central bank maintains its inflation target of 2% from 2024 to 2030. By 2030, house prices will be 5% higher than the 2020 inflation adjustment.
The company believes that the house price revision “may cause some short-term pain”, but it is needed for a healthy economy. As mentioned earlier, it is mainly recent home buyers and investors who are affected. The former is unlikely to have any loss, because they will live in the house for a period of time.
Another situation is that if high house prices continue to be maintained, it will lead to long-term economic losses. Because every dollar spent on housing will have a crowding-out effect. If house prices grow faster than the local economy, future economic growth will be stifled. Even in New York, which has an economy the size of Canada, it is difficult to maintain its population growth under such house prices.
