TORONTO – There’s mounting evidence October was a weak month for sales of Canadian housing.
A new monthly analysis by Teranet shows Canadian housing prices declined last month compared with September — only the third time in 13 years of data that there was a month-to-month decline in October.
The Teranet-National Bank National composite house price index, released Wednesday, said house prices were up an average of 3.4 per cent across Canada in October compared with a year ago.
However, the index also showed an 11th consecutive month of deceleration in year-to-year price increases and a 0.2 per cent drop in average prices from September levels.
The index also declined between September and October 2008, just before a major recession was sparked by a crisis in the U.S. financial industry.
Several industry groups have noted a moderation in housing sales since the federal government began tightening mortgage eligibility rules. The most recent change, in July, reduced amortization periods to 25 years from 30.
A national association representing Canadian mortgage brokers recently suggested the changes have gone too far and the Canadian Real Estate Association reported that sales of existing homes slowed since the new rules.
The Building Industry and Land Development Association (BILD), representing builders in Toronto and the surrounding area, said Wednesday that last month had the second-lowest sales of any October in the past 13 years.
“In an attempt to cool down the market, the federal government has severely affected the building and development industry in the GTA,” said BILD President and CEO Bryan Tuckey.
“The introduction of stricter mortgage regulations has triggered a decline in new home sales, and if this trend continues, it will affect job creation in the coming years, restricting economic growth.”
BILD says RealNet Canada, the association’s source of market intelligence, showed 2,792 new homes were sold in October — the third month in a row of low sales in the Greater Toronto Area.
It said year-to-date sales of 29,322 new homes in the GTA were 14 per cent below the long-term average.
Teranet said in its national report that Canadian housing prices were down from the month before in seven of the 11 metropolitan markets surveyed.
It was the third consecutive month of decline for Quebec City, off 0.9 per cent and Victoria, 0.6 per cent and the second consecutive drop for Ottawa-Gatineau, down 0.4 per cent, and Montreal, off 0.3 per cent.
Toronto was down 0.6 per cent on the month, as was Calgary (-0.2 per cent) and Halifax (-0.1 per cent), while Winnipeg was flat.
Prices were up 0.1 per cent in Vancouver, 0.3 per cent in Edmonton and 0.4 per cent in Hamilton.
In Montreal, 12-month inflation has decelerated in 10 of the last 11 months, in Toronto in each of the last six months and in Winnipeg in each of the last four months.
Twelve-month price changes continue to vary widely.
In October, the 12-month gain exceeded the national average by a wide margin in four metropolitan areas: Halifax (8.9 per cent), Hamilton (7.2 per cent), Toronto (6.4 per cent) and Winnipeg (5.9 per cent).
Montreal, with a gain of 3.6 per cent and Calgary, at 3.5 per cent, were close to the national average, while price increases of 2.6 per cent in Quebec City and Edmonton and 2.5 per cent in Ottawa-Gatineau were below the national average.
Vancouver and Victoria both saw price deflation of 1.0 and 1.7 per cent respectively.
The Teranet index is estimated by tracking observed or registered home prices over time using data collected from public land registries. All dwellings that have been sold at least twice are considered in the calculation.