Canadian home prices continued their ascent in April, while the number of existing homes that changed hands came in slightly lower than a year ago.
The average sales price across the country rose 7.6 per cent from a year earlier, to $409,708.
Averages can be distorted by changes in the types or locations of homes that are selling. If you take the Vancouver and Toronto areas out of the mix, the average price in the rest of the country was up 4.8 per cent. The MLS Home Price Index, which attempts to give a more apples-to-apples comparison of price increases, rose 5 per cent. That’s a slightly slower pace of home price growth than the 5.19 per cent gain in March.
But at an annual growth rate of around 5 per cent, Canadian home prices are continuing to rise faster than incomes are, something that is worrying to some economists.
“With home prices already estimated to be 10 per cent overvalued, the risk is for more froth to gather in the Canadian housing market,” Toronto-Dominion Bank economist Diana Petramala wrote in a research note Wednesday.
The price gains came even as sales of homes over the Multiple Listing Service last month were 0.3 per cent below those in April 2013, according to data released by the Canadian Real Estate Association (CREA) on Thursday.
Last month’s sales were also slightly lower than the average number of sales that have occurred in April over the past decade. Sales were up from a year ago in Greater Vancouver, Calgary and Edmonton, but down in areas like Ottawa, Montreal, and rural Quebec, said CREA, which represents the country’s realtors.
The number of homes that are selling is running below the 10-year average in more than 60 per cent of the markets across Canada, it added. The realtors, many of whom have argued that Ottawa has gone too far in its efforts to curb growth in the housing market, suggested that that statistic means the government should not take any more steps in that regard.
“This shows that tightened mortgage rules and guidelines are working as intended to keep activity in check despite mortgage interest rates remaining extraordinarily low,” CREA’s chief economist, Gregory Klump, stated in a press release. The Canadian government has made a number of moves in recent years to stem the growth of consumer debt levels and house prices, as it has sought to prevent a bubble from forming in the market. Many economists were in favour of those moves.
On a seasonally-adjusted basis, sales were up 2.7 per cent from March, CREA said. That marks the third month in a row of rising month-over-month sales, following a string of declines through the winter months. Greater Vancouver and Greater Toronto led the charge, while smaller markets faced challenges.