Average Canadian Prices Declined by 2% in July, Dragged down by Vancouver

The national average home price in Canada declined by 2% in July compared to July 2011, due to price falls in Vancouver, as most markets saw slight increases. Figures from the Canadian Real Estate Association showed the average price for a Canadian home sold in July 2012 was $353,147.

If Greater Vancouver is taken out of this equation then the national average price saw an increase of 1.1% compared to the same month last year. Although prices in Greater Vancouver and Greater Toronto have declined from recent peaks, prices in most markets have risen since the same month last year. Sales figures remained largely unchanged in July compared to June, declining by less than one 10th of a percentage point. While some local housing markets saw activity levels increase on the previous month this was balanced by the number who saw activity levels decline. Activity was up in Calgary, Chilliwack and Kingston, but there were fewer sales in Newfoundland & Labrador, Edmonton and Toronto.

Mortgage regulations were recently changed in Canada and this latest data confirms the effect on sales in Greater Vancouver and Greater Toronto. Shortened amortization periods mean some first-time buyers are now having difficulty in qualifying for mortgage financing, and of course this will have a knock-on effect on the rest of the market as it will take longer for those at the bottom of the chain to sell their current home.

The number of new listings fell 3.3% in July compared to June, and declines were seen in over half of all local markets including the Fraser Valley, Vancouver, Toronto, Montréal, Edmonton and Calgary. In spite of slowing conditions the market is still very much in the balanced territory as sales activity is still stable. The ratio of sales to new listings was 53.4% in July, up from 51.6% in the previous month. The national number of months of inventory stood at 6.1 months at the end of July, unchanged from the previous month. This level has been largely the same since the end of 2010.