Sales of Canadian homes have seen a decline for the first time in around 18 months. The flurry of activity in recent months has now shown marked signs of slowing down.
Housing Market During the Previous Months
In October of 2020, sales of houses in Canada declined by 0.7% on the previous month’s data according to the Canadian Real Estate Association. Also, a rise of 1% in benchmark prices has brought the total gain to 7% since April.
The boom seen in the Canadian real estate market during the summer months was due in part to record-low interest rates. This helped cause an increase in demand for spacious houses which, in turn, raised prices and sales during the current pandemic.
Housing Market Decline
The real estate board for Greater Vancouver have revealed data displaying sales for the last month to have increased by 46% when compared to March 2020. However, weekly stats indicated a sharp fall during the month.
It was a similar story in Toronto where sales of accommodation rose by almost 50% in the first two weeks but dropped by 16% in the latter weeks when compared to March’s figures.
Recently, the data indicates the market cooling as more and more properties enter the market in Canada’s most populous cities and metropolitan areas.
Deputy Chief Economist at the Canadian Imperial Bank of Commerce, Benjamin Tal, stated that the amount of activity that took place during the summer was not sustainable. Tal expressed little surprise in the recent change and says that more consistent and steady growth is expected after a market softening over Christmas.
During October, new listings rose 2.9%. Listings in Toronto, Ottawa, and the lower mainland of British Columbia have pushed up the supply. The latest national sales to new listing ratio is 74.3%, a fair amount higher than the average of 54.1%.
The Pandemic’s Effects on the Housing Market
Almost 1 million Canadian registered for emergency COVID-19 benefits on the first day of the scheme. With so many people requiring government assistance, it is clear that the pandemic has plunged many into financial peril and doubt. As a result, personal spending that supported many leisure industries such as sports and Canadian casinos have seen a sharp decline.
Land-based casinos in Canada have been hit particularly hard by the pandemic. Despite several health measures being put in place across the country, many people are opting to avoid the leisure industry altogether, in favour of other pursuits. The fact personal finances are currently tight for many gives further reason to give casinos a miss and could potentially hurt the industry in a big way.
Legal Trouble for Buyers and Landlords
In total, approximately 65,000 properties were sold in Canada within the first two months of 2020. A lot of those deals are now being finalised in a vastly different economic and social environment compared to when they were first made.
Another matter adding to the complications is known as ‘vacant possession’. This is a legal obligation to make sure that sold houses are deemed fit for occupancy when the new tenant takes possession. A moratorium on evictions also meant that some new owners cannot use houses they’ve bought.
What Does the Future Hold for the Canadian Housing Market?
During these unprecedented times, it is difficult to say with any real certainty what the financial landscape is going to look like in the mid to long-term. There are plenty of educated and data-backed opinions from housing experts but as things progress, only time will tell what the future of the Candian housing market will look like.
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