The national home price index fell 1.7 per cent to $789,600 from June to July on a seasonally adjusted basis, according to the Canadian Real Estate Association (CREA). It follows a record monthly decline of 1.9% from May to June. From April to May, the index fell 0.8 percent and from March to April, it fell 0.6 percent. From February to March, it fell by 0.18%. Suburbs and less populated cities in Ontario and British Columbia have lost the most value since the peak of the market. All were areas that had seen prices soar in the first two years of the COVID-19 pandemic, when residents took advantage of historically low interest rates and left the cities in search of more space. In Ontario’s Oakville-Milton area, an affluent area west of Toronto, the home price index fell 17% on a seasonally adjusted basis from February to July. The typical home price lost $266,000 during that period. In Mississauga, a large urban center bordering Toronto, the home price index fell 13%. In Brantford and Barrie, the typical home price fell by 14 per cent and 9 per cent, respectively. In BC’s Chilliwack region and the Fraser Valley, the index fell 9 percent and 8 percent, respectively. From peak prices in February, the national home price index is down 6%. This marks the biggest five-month drop since the financial crisis. And it doesn’t fully reflect the impact of the Bank of Canada’s last rate hike in mid-July, when the central bank raised the benchmark rate by a full percentage point to 2.5%. “Up and down for now,” Robert Kavcic, senior economist at Bank of Montreal, said in a note to clients, adding that the July resale numbers did not “fully reflect” the latest move in interest rates. Mr. Cavcic and other private-sector economists expect home prices to fall further as borrowing is set to become more expensive with the Bank of Canada’s plan to continue raising interest rates to combat soaring inflation. It predicts the national home price index will fall as much as 20 percent from its February peak through next year. Nationally, sales volume fell 5.3 percent from June to July, with activity falling in about three-quarters of the country. Last month, resales fell 5.6%. Areas that continue to see large declines in activity are Toronto and Vancouver – Canada’s two most expensive markets – as well as the Fraser Valley, Calgary and Edmonton. At the same time, the number of new listings fell 5.3 percent — a sign CREA said suggests home sellers are waiting on the sidelines. Compared to July last year, the house price index increased by 10.9%. This is a much smaller increase than in January and February, when the annual increase in the price index was close to 30%. Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox morning or night. Sign up today.
