Chris Bolin
It was a slightly better than average December for the Canadian resale housing market, the Canadian Real Estate Association said, although prices and inventory remained little changed from the month before.
The national resale price was $344,551, up 2 per cent from the same month last year and little changed from November. The number of listings was also little changed from November, and as in November the stock of inventory would take 5.8 months to sell at current sales levels. Sales, meanwhile, were down 14 per cent from a year ago, when a new record for December's sales was set.
About 447,010 homes traded on the Canadian Multiple Listing Service in 2010, down 3.9 per cent from 2009.
After grinding to a halt in July after a record setting run-up in prices, the resale market gradually improved in the second half of the year. December sales were 18 per cent higher than they were in July, and CREA said low interest rates are likely to keep propping up the market - at least in the short term.
"The hand off to 2011 for sales activity in the fourth quarter suggests that the continuation of low interest rates will further support the housing market," said CREA chief economist Gregory Klump. "Sales may be starting to plateau in some of Canada's most active and expensive housing markets. Combined with a pickup in new listings and further interest rate increases, the stage is being set for smaller price gains and a further deceleration in the growth of mortgage debt."
The new housing market has already showed signs of cooling, with construction starts falling by 13 per cent in December, mostly because of a 45-per-cent decline in condominium construction in Ontario. Prices, however, are still ticking higher. Year-over-year, the Statistics Canada new housing price index was up 2.3 per cent in November after a 2.5 per cent increase in October.
TD Bank economist Pascal Gauthier said that while 2010 ended up being a "bang-on" match to the decade's average year, but he expects activity to slow in the second half of 2011.
"This view is predicated on short-term interest rates starting to rise in the summer. Concurrent with a continued gradual rise in longer-term interest rates, this will erode home affordability and start to bite into demand," he said.
"A decent tailwind should, however, be provided by continued job and income gains through this self-sustained economic recovery. This will help limit the downside to demand. Moreover, with fewer housing starts on tap over the next few quarters, new units look unlikely to create a glut on the supply side."