House prices in Canada are moving even higher, according to Canadian Real Estate Association data released today.
The average price of a Canadian home sold in November was more than $413,000, an increase of 5.7 per cent over the previous 12 months.
As has been the case for several months, the realtor group says the national average is being skewed higher by hot sales in two of the country's biggest housing markets: Toronto and Vancouver.
Stripping out those two cities, the average price drops to $331,743, CREA says, and the annual gain dips to five per cent.
On a monthly basis, prices actually declined in several cities, partially because of seasonality — people are in a homebuying mood during the spring and summer, before demand drops in the winter.
Calgary is one city where house prices declined in November compared to October's level. Policymakers have been keeping a close eye on the city as the dramatic drop in oil prices is likely to impact all parts of its economy.
'The effect of lower oil prices on Canada’s housing markets is something of a wild card' - CREA economist Gregory Klump
It could be too early to tell what cheap oil is going to do to Alberta's house prices, CREA says.
"The effect of lower oil prices on Canada’s housing markets is something of a wild card at the moment,” CREA's chief economist Gregory Klump says. "It’s not clear how far oil prices may drop or for how long they’ll stay down. How that plays out may affect the outlook for interest rates, job growth, consumer confidence and sentiment about making major purchases."
Other economists agreed with that sentiment. "The recent plunge in oil prices is likely to temper activity in housing next year," TD economist Jonathan Bendiner said. "The drop in oil prices is expected to hamper employment and income growth in commodity driven markets such as Calgary and Edmonton. Prior to the slide in oil prices, these markets were considered front-runners in Canada's housing market but are now expected to soften over the near-term as the low oil price environment persists."
The number of sales in the first 11 months of this year is also up, by about five per cent, compared to 2013's level.
In a separate release on Monday, CREA upped its forecast for the number of homes it expects to sell this year and next. The association said Monday it now expects 481,300 homes sold this year, up from a September estimate of 475,000.
If sales hit the target, it would represent a gain of 5.1 per cent over 2013 and would be the highest level since 2007, when the industry hit a record high.
Looking forward to 2015, the organization forecast sales will total 485,200 homes, up from an earlier forecast of 473,100.