Updates › Canadian Housing Market

NEW STRESS TEST REGULATIONS PROMPT CANADIAN HOMEBUYERS TO INCREASE BUDGETS, RE-EVALUATE HOME FEATURES OR DELAY THEIR PURCHASE.


The average residential sale price in the Greater Toronto Area dropped to $753,747, down almost 10 per cent from $834,144 in January and February of 2017. With move-up buyers driving the market — many of whom are making their second or third transition — alongside a booming condominium market, prices are forecasted to soften throughout the year. Not all regions in Ontario are being affected like the GTA. In Ottawa, the average residential sale price in January and February was $388,289, up four per cent from the same period in 2017, and Kitchener-Waterloo saw a five per cent price increase year-over-year.

At the same time, the average residential sale price in Western Canada continues to increase. Greater Vancouver saw prices increase almost 11 per cent in January and February to $1,051,513, up from $950,184 during the same period in 2017. Despite reduced unit sales, prices are expected to continue rising. While Victoria is mostly a seller’s market compared to Greater Vancouver, it has also seen an increase in average residential sale price, which was $831,000 in January and February this year compared to $761,000 during the same period in 2017.

It is expected that government intervention and the stress test will continue to play a pivotal role in purchasing behaviour as we look to the months ahead. The Leger survey found that four in 10 buyers have had to compromise on their purchase, and almost one in three opted not to purchase altogether. One quarter of buyers compromised on the size of their home, while 18 per cent made concessions on the location of their home.

Despite these compromises, 55 per cent of homebuyers say they feel like they can purchase the type of home that suits their families’ needs compared to 46 per cent last year.

In Alberta, first-time homebuyers looking for affordability in Calgary and Edmonton continue to drive the market forward, with single Millennials and young couples gravitating toward the relatively stable condominium market. The average residential sale price increased 1.4 per cent in Calgary to $481,775 in January and February of this year, up from $475,288 during the same period in 2017. Meanwhile in Edmonton, a wide variety of inventory offers good opportunities for buyers, resulting in a small increase in activity and stable year-over-year prices to start 2018.

Interestingly, activity in Atlantic Canada experienced increased demand from first-time homebuyers, many of whom are young couples and families. At the same time, the condominium market is being driven by retirees who are looking to downsize. Prices continue to rise across most Atlantic markets, especially in Saint John where the average residential sale price in January and February this year was $201,328, compared to $168,956 during the same period in 2017.

New residential and commercial development projects in markets across the country are expected to fuel demand. Cities most impacted will include Edmonton, Kelowna, Victoria and Fraser Valley in the West and Windsor, London, Hamilton-Burlington, Barrie, Durham, Ottawa, Saint John and Halifax in Central and Eastern Canada.



Canadian Housing Market


Canadian housing starts closed the year down close to 20 per cent, falling from 212,028 units at a seasonally adjusted annual rate (SAAR) in November to 172,965 units SAAR in December The six-month trend in Canadian housing starts of 203,500 units SAAR was also down. For the year 2015,  total Canadian housing starts were up 6 per cent over 2014.  Large declines in oil-producing provinces such as Alberta, Saskatchewan and Newfoundland were largely offset by strong new home construction in BC and Ontario. 

Housing starts in BC rebounded in December, rising 26 per cent to 33,346 units SAAR.  On a year-over-year basis, housing starts were up 15 per cent, led by a 22 per cent increase in multiple unit starts which offset a 3 per cent decline in single detached starts. For the year 2015, total housing starts in BC increased 12 per cent compared to 2014. 

Looking at census metropolitan areas (CMA) in BC, total starts in the Vancouver CMA were up 20 per cent year-over-year in December due to a 27 per cent jump in multiple starts. For all of 2015,  Vancouver CMA new home construction rose 9 per cent, finishing the year at 20,863 total starts.  In the Victoria CMA, housing starts more than doubled compared to December 2014, with strong gains in both single and multiple starts. For all of 2015, Victoria CMA starts increased 53 per cent to 2,008 total starts. Home construction in the Kelowna CMA closed the year down, falling 44 per cent year-over-year. For all of 2015, total housing starts dipped slightly, falling 2 per cent to 1,280 total starts.  Housing starts in the Abbotsford-Mission CMA were up 21 per cent to finish the year and were 62 per cent higher for all of 2015 at 806 total starts.