Home sales were strong across the country last month, but that hasn’t stopped prices from sliding in Canada’s least affordable markets.
According to the latest Teranet-National Bank Composite Index, prices fell by 0.8 per cent from June to July, the sixth consecutive monthly decline. Prices have fallen by five per cent since January.
“This comes against a backdrop where the resale market continues to be particularly weak, due in particular to the uncertainty surrounding the trade war with the United States,” said National Bank economist Daren King.
Although the number of transactions on the resale market has risen over the past four months, “market conditions across the country have eased considerably and now indicate a balanced market after being tighter than average,” said King.
However, said King, this turnaround is mainly due to market conditions now strongly in favour of buyers in Ontario and British Columbia, Canada’s least affordable provinces, which is driving prices down, King said.
As a result, prices are down on an annual basis by 6.7 per cent in Toronto and 4.1 per cent in Vancouver.
On the flip side, Montreal and Quebec City – with their more affordable price points – are experiencing the highest price increases among the eleven cities included in the composite index.
What lies ahead for the market?
King says current market conditions and high inventory levels are likely to continue suppressing price growth.
“Against a backdrop of persistent economic uncertainty, moderating population growth and the risk of long-term interest rates remaining high, home prices are likely to remain under pressure over the coming months, even if the resale market may regain some strength,” he said. “Indeed, the backlog of properties for sale will continue to weigh on prices over the coming months.”
