Housing Market Shows Signs of Slowdown, CBC News

This article appeared on CBC.ca on January 16th, 2012.

The average price of a Canadian home sold in December was $347,801, just 0.9 per cent higher than the same month a year earlier.

That’s the smallest increase since October 2010, the Canadian Real Estate Association said Monday.

“Momentum for national sales activity and average price remains positive but is slowing,” CREA chief economist Gregory Klump, said. “National average price momentum may wane further over the next few months.”

More than half of all local markets across the country showed a gain, with the remainder showing a small decline. At the local level, big gains were recorded in Saskatoon (up 21 per cent), Winnipeg (up 11 per cent) and Kitchener-Waterloo, which was up 13 per cent.

Stronger gains through much of the year in large cities such as Toronto and Vancouver skewed the overall average higher, CREA said.

Vancouver house prices increased by 15.4 per cent in 2011, while prices in Toronto were 7.9 per cent higher after being above 10 per cent earlier in the year.

Greater Toronto Area sales have consistently gained since the middle of 2010 and are now up by 36 per cent since July 2010, while prices have been mostly flat since April, TD economist Francis Fong noted in a report following the release of the CREA statistics.

Sales activity came in 4.6 per cent above year-ago levels in December. It also stood above the five- and 10-year average for December sales.

The agency reported that 456,749 homes were sold across CREA’s multiple listing service in Canada last year, broadly in line with the average over the last 10 years.

Real estate firm Royal LePage forecast last week that prices in 2012 will increase by an average of 2.8 per cent across the country. That’s ahead of December’s annual pace but well behind some of the rates of return seen in recent months and years.

“We look for both sales and prices to be roughly flat this year,” BMO chief economist Douglas Porter said. “That could be just what the policy doctor ordered, allowing incomes to catch up to higher prices.”