The latest index from the Canadian Real Estate Association shows sales of residential property in Canada rose by 2.8% in August compared to July. Sales activity in August was 11.1% more than levels reported for August last year, with figures in line with the 10 year average.
Sales increased year on year in approximately two thirds of local markets. Greater Vancouver, Vancouver Island, Victoria, Greater Toronto, Edmonton, Calgary and the Fraser Valley all saw double-digit gains. In August the national average selling price for a home was $378,369, an increase of 8% compared to August last year. However these figures are skewed by some of the larger and more expensive markets in Canada, for example Greater Vancouver and Greater Toronto. If these markets are taken out of the equation, then in the year on year increase in national average house prices falls from 8.1% to 4.8%.
The article in Propertywire.com points out that the MLS® Home Price Index could prove to be more insightful. According to this index, year on year prices of one and two-story single-family homes increased by 3.45% and 3.61% respectively last month. The price growth for apartments, row houses and townhouses was far lower at 1.25% and 1.85% respectively for the same period.
The chief economist for the Canadian Real Estate Association has pointed out these price gains are only to be expected. This time last year new mortgage rules were introduced, greatly reducing the amount of sales activity. At the time it was anticipated that buyers who delayed purchases due to these new rules would return to the housing market, even though the levels seen during the last few months have been higher than expected. This might be due to the recent increases to fixed mortgage rates, as buyers with pre-approved financing may have chosen to purchase a home sooner than expected. However, most people in this position have now bought property, so demand could soften during the final quarter of this year.
Some 325,180 homes have been sold so far this year, a decrease of 2.9% compared to the first eight months in 2012. Even though demand has recently increased, it still anticipated that this year's annual sales figures will be lower than last year.