The average Canadian home price reached a record $816,720 CAD last month
February saw a record rise in home prices in the country as buyers entered the market ahead of an expected interest rate hike by Canada's central bank.
The Canadian Real Estate Association reports that the national average home price is up more than 20 per cent from a year ago, reaching a record $816,720 CAD in February.
Record low interest rates and the demand for large housing units during the COVID-19 pandemic triggered a frenzy of home buying by Canadians, making the country's housing market one of the most unaffordable in the world. This negative trend has prompted local politicians to try to replenish the depleted housing stock by encouraging new construction.
The February situation suggests that record-high prices and the beginning of the traditional spring buying season may attract more sellers to the market. In particular, the number of new listings was up 24% over the previous month. Nevertheless, demand driven by the Bank of Canada's increase in the benchmark interest rate amid warnings of new hikes due to rising inflation was so high that the ratio of sales to new listings far exceeded the historical norm.
"Ideally, listings will come in large numbers in the coming months," Sean Cathcart, senior economist at the National Realtors Group, said in a press release.
However, the Canadian Real Estate Association warned last Tuesday that we should not expect relief in the next 2 years. The national average home price is projected to rise 14.3 per cent a year to $786,000 CAD in 2022, and then another 3.2 per cent to $810,934 CAD in 2023. The increase reflects an "unprecedented imbalance" in housing supply and demand, the association said, warning that the projections are an understatement given the recent price spike. Robert Kavcic, senior economist at BMO Capital Markets, said the composite composite housing price index rose 3.5 percent year-over-year, the strongest monthly gain on record.
