Housing market cools down

The Canadian housing market showed signs of a slowdown in June, with prices and sales numbers declining by the slight amount that policymakers had been hoping for.

Lower sales, prices hint at soft landing for once-soaring real estate

Canadian home prices inched slightly lower in June, down 0.8 per cent from last year's level. (Canadian Press)

The Canadian housing market showed signs of a slowdown in June, with prices and sales numbers declining by the slight amount that policymakers had been hoping for.

There were 4.4 per cent fewer homes sold in June 2012 compared to the same month last year, the Canadian Real Estate Association said Monday. That was the first year-over-year decline in national activity since April 2011.

In the first half of 2012, a total of 257,193 homes traded hands over CREA's Multiple Listings Service, up 4.7 per cent from the same period in 2011.

"Canada’s housing market lost a little altitude in June, but it’s still flying pretty high," CREA president Wayne Moen said. "That said, sales activity and average prices bucked the national easing trend in a number of markets, which underscores that all real estate is local."

Indeed, on the price side, the average price for homes sold in June 2012 was $369,339, down 0.8 per cent from the same month last year.

As has been the case in other months, the numbers out of Vancouver skewed the overall average. Prices were actually higher in seven out of 10 markets, but a large decline in Vancouver dragged the average down.

Vancouver prices lower

The average selling price of a home in Vancouver declined by 13 per cent to $701,141 over the past 12 months. If Vancouver is stripped out of the national average, prices would have increased by 3.2 per cent over the past year, CREA said.

Other prominent cities that lost ground include Victoria and Saskatoon (each down 4.1 per cent) Trois-Rivieres (down 3.6 per cent) and Saint John, where prices declined by 3.2 per cent. Prices in the Kitchener-Waterloo region also ticked 0.3 per cent lower in the year ended in June.

Cities that posted gains include Toronto, (up 6.8 per cent) Hamilton, (6.9 per cent) Winnipeg, (5.4 per cent), Montreal (3.7 per cent) and Calgary, where prices increased by 2.5 per cent, on average, over the past 12 months.

But it's that large Vancouver price drop that pushed the overall average into the red.

Because the average can be skewed by a single sizable move in either direction, CREA says its MLS Home Price Index is a better barometer of the trend in prices. For the month, the agency's annualized HPI rose 5.1 per cent from May to June 2012. That was a slight deceleration from the 5.2 per cent pace of gain reported in May.

Add it all up and year over year gains have moderated in most categories of housing, the agency says.

Last month, the federal government moved to tighten the lending standards required to get a CMHC-insured mortgage, in an attempt to let some of the air out of the market. Among the changes was to limit the maximum amortization period to 25 years.

Monday's data suggests that the housing market was slowing down naturally even before Ottawa stepped in.

"Home buyers didn’t rush their purchases before the most recently announced changes to mortgage regulations came into effect," CREA's chief economist Gregory Klump said.


  • A previous version of this story incorrectly reported that Toronto home prices decreased 6.8 per cent in the 12 months to June. In fact, they increased by that amount.
    Jul 16, 2012 2:06 AM ET