Canadian existing home sales reached the highest in more than six years in January, a gain realtors attributed to Vancouver and Toronto buyers jumping into the market before new mortgage restrictions take effect.
The number of transactions rose 0.5 percent from December to 43,916, the Canadian Real Estate Association said Tuesday from Ottawa. Over the last 12 months sales climbed 8 percent and the average price by 17 percent to C$470,297 ($340,031), the fastest pace since March 2010.
Vancouver sales rose 5 percent and in the nearby Fraser Valley they gained 8.9 percent. In Toronto, there was a 3.2 percent increase. Regions tied to the slumping oil industry showed weakness including the 8.4 percent fall in Calgary and a
9.3 percent fall in the province of Newfoundland.
Finance Minister Bill Morneau introduced tougher mortgage rules in December that take effect this month. They’re aimed at young buyers in Toronto and Vancouver at risk of being stung by an eventual rise in borrowing costs. Prices and sales have surged in recent years with the lowest mortgage rates in decades fostered by a drop in global bond yields and in the central bank’s benchmark rate to 0.5 percent.
“Tighter mortgage regulations that take effect in February may shrink the pool of prospective home buyers who qualify for mortgage financing and cause national sales activity to ease in the months ahead,” CREA Chief Economist Gregory Klump said in the report.
The monthly sales figure was the highest since October
2009. January was also a month with a tighter supply of homes, with inventory equal to 5.3 months of sales marking the lowest in almost six years, led by British Columbia and Ontario.
(Updates with historical comparison in first paragraph.)