Sales of existing homes held relatively steady in Canada in March, but average prices across the country rose a sharp 8.9 per cent year over year, skewed by "a few pricey areas of Greater Vancouver," the Canadian Real Estate Association said Friday.
"A record number of multimillion-dollar property sales in Richmond and Vancouver West are pushing up average prices for Greater Vancouver, British Columbia and nationally," said CREA chief economist Gregory Klump.
"If Vancouver is excluded from the equation, the national average price increase is cut by more than half to 4.3 per cent."
Seasonally adjusted national home sales activity in March was a tenth of a percentage point above levels for the previous month, with stable demand in most large urban centres, CREA said.
The association said national sales activity in each of the first three months of 2011 ran close to five- and 10-year monthly averages. However, that meant that seasonally adjusted activity in the first quarter was up 4.5 per cent from the final quarter of 2010 and at the highest quarterly level in a year.
Most of the increase was due to demand in Vancouver and Toronto, CREA said.
Recent changes to mortgage regulations that shortened the maximum amortization period to 30 years from 35 "may have caused a number of sales in some of Canada's more expensive housing markets to be brought forward into the first quarter that would have otherwise occurred later in the year," CREA explained.
Sellers looking to trade up before changes to mortgage regulations took effect made their move early, resulting in a significant rise in newly listed homes in January and February of this year. With changes to mortgage regulations looming in March, seasonally adjusted new residential listings for the month dropped five per cent month-to-month.
Meanwhile, CREA said the housing market remains relatively balanced between buyers and sellers in most urban centres, with the national sales-to-new listings ratio at 56.5 per cent in March.
"Based on sales-to-new listings ratios, more than half of local markets in Canada could be considered balanced in March, with two-thirds of the remaining markets considered to be as sellers' markets."
Seasonally adjusted unsold inventory on the market stood at 5.6 months at the end of March on a national basis. That was unchanged from the previous month. Almost half of all local markets saw the number of months of inventory shrink compared with the previous month.
"Looking ahead, evidence suggests that the potential rush of sales activity in March before recent changes to mortgage regulations took effect was a story that was largely focused in condo sales activity in Greater Vancouver," Mr. Klump said.
"This confirms that the expected (overall) impact on sales activity of recent changes to mortgage regulations will likely be minor over the near term. Interest rates are now widely expected to remain on hold until at least mid-July, which is supportive for resale housing demand, market balance and prices."