Canada’s housing market rose sharply in October, with sales jumping nearly 9 percent and price increases accelerating at an unprecedented rate since the pandemic’s property boom hit a spring high.
After a brief hiatus over the summer, national resale reached 53,746 last month on a seasonally adjusted basis, according to the Canadian Real Estate Association (CREA).
It is 8.6 percent higher than in September and is the steepest jump in resale since July 2020, when the first wave of home buyers struggled to buy larger properties to deal with the pandemic’s demands for a home stay.
Low mortgage rates and a lack of properties for sale continue to boost competition and push up house prices. CREA’s house price index, which adjusts for price volatility, rose 2.7 percent to $ 770,000 for a typical nationwide home. It is the highest monthly price increase since February and March, with homes in the Toronto and Vancouver suburbs pulling dozens of deals.
“The fire is still burning,” Robert Kavcic, a senior economist at BMO, said in a research note. “Demand is still going strong thanks to low mortgage rates,” he said.
With the Bank of Canada moving up on the timeline of an expected rate hike, homebuyers are even more motivated to buy to lock in today’s low mortgage rates.
Sir. Kavcic said he expects momentum to continue until the central bank raises interest rates. “The Canadian housing market is long awaited with higher interest rates, and momentum is still pointing upwards until it gets them,” he said.
Throughout most of the pandemic’s property frenzy, the demand for home buyers has increased in the suburbs, smaller towns and semi-rural parts of the country. Real estate markets that have never experienced strong competition are now at least 30 percent more expensive than a year ago. It includes most of Ontario, Chilliwack in British Columbia and Moncton in New Brunswick.
The pace of price increases picked up from September to October in most of Ontario. Some parts of southern Ontario – including Barrie, Cambridge, Hamilton, Burlington and Woodstock – reported a monthly jump of at least 3 percent according to the seasonally adjusted house price index.
“After a summer where it looked like housing markets may be calming down, October figures suggest we may be moving back toward what we saw last spring,” CREA President Cliff Stevenson said in a news release.
In the Toronto region, where prices did not rise as fast as the suburbs, the house price index rose to the highest level since the real estate boom in 2016-17. The price index for a typical home in the Greater Toronto area rose 4.8 percent to $ 1,139,400 from September to October. In the nearby suburbs of Oakville and Milton, the house price index rose more than 6 percent to $ 1,452,900.
Over a period of three months, the price of a typical house in the Toronto region has risen by just over $ 100,000. In the Oakville-Milton area, it has risen more than $ 200,000, and in the Fraser Valley, BC, it has risen by just over $ 100,000.
The Federal Mortgage Insurance Company Canada Mortgage and Housing Corp. has warned that the country’s housing market is overvalued and overheated. It has identified Hamilton, Toronto, Ottawa, Halifax, Moncton and Montreal as very vulnerable to a price drop.
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