Netizen 24 NGA: Home sales drop in January as new mortgage rules hit

Diposting oleh On 07.55

Home sales drop in January as new mortgage rules hit

National home sales dropped sharply in Canada in January after climbing to their highest monthly level on record in December, offering evidence that buyers rushed to lock in deals in December before tougher new mortgage qualification rules took effect on Jan. 1.

The Canadian Real Estate Association said the number of homes sold in Canada fell 14.5 per cent in January over December on a seasonally adjusted basis, with sales declining in three-quarters of all local markets including virtually all major urban centres.

The Greater Toronto Area recorded a 27-per-cent drop in January over December, while sales fell 32 per cent in Hamilton-Burlington, 20 per cent in Kitchener-Wateroo and 19 per cent in the Niagara region. The Ottawa region the largest monthly drop in sales in January, falling 33 per cent on a seasonally adjusted basis.

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C REA chief economist Gregory Klump said the number of new homes listed for sale also declined sharply in January as buyers stepped away, so the market balance did not change significantly as a result.

"The decline in January sales provides clear evidence that the strength in activity late last year reflected a pull-forward of transactions, as rational home buyers hurried to purchase before mortgage rules changed in 2018," he said in a statement.

Bank of Montreal economist Robert Kavcic said the January sales slump "is largely payback" for an increase in sales in the last three months of 2017 as buyers hurried to lock in deals.

"Regionally, sales volume declines were widespread across the country in January, suggesting that the nationally implemented policy change did indeed bite," he said in a research note.

Canada's banking regulator announced new rules in October, which took effect Jan. 1, requiring home buyers to pro ve they could still afford their mortgages even if interest rates were to rise significantly. The new rule appears to have had a particular impact in the more expensive Toronto region, where many buyers were already stretched to afford a home even before the tougher qualification standards.

"The piling on of yet more mortgage rule changes that took effect starting New Year's Day has created home buyer uncertainty and confusion," CREA president Andrew Peck said.

New listings in January fell 22 per cent nationally compared to December on a seasonally adjusted basis, including a 39-per-cent decline in the GTA and a 45-per-cent drop in listings in Kitchener-Waterloo.

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CREA said sales were down 2.4 per cent nationally on an annual basis compared to January last year, but were close to their 10-year average for the month of January.

Average sale pr ices fell 2.4 per cent in January over December on a national basis, but were up 2.3 per cent compared to January last year for a modest pace of annual growth.

CREA also reports benchmark sales prices based on the MLS Home Price Index, which adjusts for the changing mix of home types sold each month.

The benchmark price rose 7.7 per cent annually in January compared to January, 2017, but it was the ninth consecutive month with the benchmark price level declining on a year-over-year basis, CREA said. It was also the smallest annual increase for any month since December, 2015.

The national trend was largely driven by slower price growth in Toronto and surrounding cities, while the benchmark sales price continues to climb in Greater Vancouver, the Lower Mainland of British Columbia and on Vancouver Island.

Statistic Canada released data showing that foreign ownership in Toronto and Vancouver are less than five per cent.
Source: Google News

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