Home Price Drop Hits 15% in Canada as High Rates Squeeze Buyers - BLOOMBERG
(Bloomberg) -- Canadian home prices fell for an 11th straight month as rising interest rates continued to limit what prospective buyers can afford, ramping up pressure on the country’s housing market.
The national benchmark price for a home declined 1.9% to C$714,700 ($532,060) in January from December, according to data released Wednesday by the Canadian Real Estate Association. It’s down 15% from last year’s peak.
The Canadian housing market has seen an abrupt reversal from its frenzied pandemic days as the central bank raises interest rates last year to combat inflation. The fast rise in borrowing costs has priced out buyers, squeezing affordability even with prices down.
Sales fell 3% in January from the previous month, while the number of new listings rose 3.3%, keeping downward pressure on prices, the real estate board data show.
That came as the Bank of Canada kept up pressure when it raised its benchmark interest rate to 4.5% at its January meeting. The benchmark rate was just 0.25% last March, making for one of the quickest increases in borrowing costs in Canada’s history. But the central bank has signaled that it might now pause to see how the country’s economy and its consumers are handling the increases.
Despite the increase in supply in January, the number of houses available for sale across the country remains constrained. The number of homes that hit the market last month was the lowest for the month of January since 2000, and the 4.3 months worth of inventory currently available for sale nationwide is still about a month less than that measure’s long-term average, real estate board data show.
“We may have to wait another month or two to see what buyers are planning this year since new listings are currently trickling out at near-record low levels,” Jill Oudil, chair of the national real estate board, said in a press release accompanying the data. “But that should change as the weather warms.”