After a sluggish winter, is Canada’s housing market poised for a turnaround? A recent report from Canadian Mortgage Trends suggests it might be.
After stricter lending rules that came into effect in January, along with higher interest rates and some new provincial policies, Canada’s two largest housing markets – Vancouver and the Greater Toronto area – saw a dramatic drop, causing a major impact throughout the national economy. In the first half of 2018, Greater Vancouver saw a resale activity drop of 25.5 %, while the GTA saw a drop of 27%.
Recent numbers, however, show that the trend may be reversing itself. In July, the GTA saw sales up by 6.6% on a year-over-year basis, with a sales-to-new-listings ratio rising to 50%, from 44% in March. The region has also seen home prices rise 3.1% since June.
Here in the Greater Vancouver area, housing activity is still down 30% from last year, although James Marple, a senior economist with TD Bank released a statement saying that for the year as a whole, “the Canadian economy looks to maintain above-trend growth.”
Why the shift? Why now?
According to Ksenia Bushmeneva, also an economist with TD, this kind of timeframe is not uncommon. “Historically the impact of a policy changes is swift, but short-lived, and it seems the housing market is once again finding its footing,” she said in a report. “We expect that resale activity hit its trough in Q2 and will begin to gradually recover thereafter.”
Though data was somewhat conflicting in July’s report – taking into consideration both Toronto and Vancouver’s numbers – statistics overall suggest that the national housing correction is resolving, which is a positive sign as we head into the final quarter of 2018.