Reports show Canada home sales slide, prices still up

Wed Oct 3, 2012 3:58pm EDT
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By Claire Sibonney

TORONTO (Reuters) - Canada's post-recession property boom is displaying fresh signs of weakness, impeded by recent government mortgage-rule changes, with sales volumes dropping even as average prices rise, industry reports released on Wednesday showed.

A survey by Royal LePage Real Estate, one of Canada's biggest real estate agencies, showed that although most cities experienced modest price appreciation in the third quarter, fewer homes were sold than in the same period in 2011.

Royal LePage said this suggests a tipping point in the market.

"A drop in the number of homes trading hands typically precedes a period of softening house prices," Royal LePage Chief Executive Phil Soper said in a statement. "Where there is reduced demand, those who want to sell their homes adjust their asking price to stimulate interest."

The average price of a resale home in Canada increased 1.8 percent for condominiums and 4.8 percent for detached bungalows year over year, Royal LePage said.

In Vancouver, which has been Canada's most expensive market, average prices posted modest decreases, particularly for condos.

In Toronto, average house price gains ranged from 2.7 percent to 5.9 percent, while demand fell modestly. Royal Lepage noted that multiple offers are still common in the Toronto area, especially for detached bungalows and standard two-storey homes.

Mindful of the U.S. housing market crash that triggered the global financial crisis, Canadian Finance Minister Jim Flaherty in June tightened rules on government-backed mortgages for the fourth time in four years.   Continued...

A sold sign is displayed in front of a home in Toronto December 15, 2009. REUTERS/Mike Cassese