Alberta home prices continued their downward slide in February as steeper job losses in the oil sector kept buyers out of the market.
In Calgary home prices fell 1.6 per cent in February compared to a month earlier and sales activity remained 35 per cent below last year's levels as the city's housing market grappled with the fallout from lower oil prices.
The drop in oil prices "has shaken consumer confidence in the Prairies, pushing potential home buyers to the sidelines and prompting more homeowners to put their home on the market," the Canadian Real Estate Association said in a new home price forecast. "This has led to a rapid shift in market balance in Alberta, and to a lesser extent, Saskatchewan."
It predicted national home sales will fall 1.1 per cent this year, to 475,700, driven by a 20-per-cent drop in sales in Alberta and an 11-per-cent decline in Saskatchewan.
Prices will likely fall 3.4 per cent in Alberta, driven by fewer sales of luxury properties, the association said, although stronger price growth in B.C. and Ontario should more than make up for the drop in oil-producing provinces. Overall, the association predicted that prices will rise 2 per cent to $416,200 this year, driven by a 3.4 per cent jump in B.C. and 2.5 per cent price growth in Ontario.
There were signs that some of the the panic among Calgary buyers is subsiding. New listings were down after spiking in recent months. The ratio of sales to new listings, a measure of the health of the local housing market, rose last month, suggesting fewer homeowners are rushing to list their properties.
However, February's housing numbers only confirmed the notion that Canada is quickly becoming a tale of two housing markets. The benchmark home price fell in Victoria, Calgary, Regina and Moncton and rose elsewhere in February compared to a month earlier. fuelled by low interest rates, Canada's most expensive cities led the way, with prices growing by 1.29 per cent in Toronto in February compared to a month earlier and 1.25 per cent in Vancouver as "some buyers apparently ruled out the possibility of ever seeing higher borrowing costs in their lifetime," said Bank of Montreal senior economist Sal Guatieri.
Seasonally-adjusted prices jumped 3 per cent in February compared to the month before, to a national average of $426,421. Sales rose 1 per cent in February compared to a month earlier. The growth rate in sales remained below the average of the past decade in nearly two-thirds of the country, Gregory Klump, chief economist with the Canadian Real Estate Association, said in a statement.
Nationally, prices rose the most among two-storey detached homes, which jumped nearly 7 per cent compared to the same time last year. Prices for townhouses and bungalows rose more than 4 per cent, while condominium prices grew by less than 3 per cent.
The softening housing market comes even as household debt continues to rise. It topped a record 163 per cent of income in the final quarter of last year, a level not seen since Canada began tracking household, driven largely by mortgage debt amid low interest rates.