Latest statistics released by the MLS® Home Price Index, the chief sales index in Canada, showed prices rose in March, year on year, but gains have been slowing. The sales increase seen in March was the slowest since June 2011, rising by just 5.1% compared to March of the previous year.
Wayne Moen, CREA President, explained that the latest figures show that Canada’s real estate sector is almost certainly slowing down:
“Overall price trends show that Canada’s housing market continues to moderate. Price increases have been shrinking since last fall. While that trend paused in March, it may reflect an early spring in many parts of the country, resulting in increased competition among buyers. That said, headline numbers mask some important differences in price trends among local housing markets and housing types.”
Moen further stressed the need for buyers and sellers to seek expert advice from their local realtor on price trends in their area before going ahead with any transation.
In all of the five markets being tracked, the MLS® HPI is above its level a year earlier, with Toronto showing the biggest gains of 7.3%. Prices are above the previous year’s levels in all housing categories tracked, with two-storey single family homes showing price gains of 6.8%. Compared from February 2012 to March 2012, the MLS® HPI rose by 1.3%.
Gregory Klump, chief economist for the CREA commented on these figures saying “The index typically experiences these types of month-over-month gains in the spring, which coincides with when the balance of supply to demand is tightest. With that in mind, it’s important to look at month-to-month movements in the context of how they compare to the same period in previous years, it masks slowing price momentum in the Lower Mainland area of British Columbia. Slower price gains there were offset in March by a modest acceleration of price gains in Calgary, Toronto, and Montreal.”
Toronto prices have seen the largest price gains since the middle of last year, and the rise in Toronto’s composite MLS® HPI is a full 2% more than the increase in Vancouver’s composite index, and this price gap may widen even more in coming months as the Vancouver market shows signs of slowing down, while sellers in Toronto are benefiting from a lack of supply.