Canada Housing Market: Slower Price Growth
Just when you thought you heard enough about housing, here’s more.
The housing market is now showing signs of returning to earth.
The COVID-19 pandemic drove massive activity in the Canadian housing market. The drop in interest rates, combined with historic fiscal support, encouraged many Canadians to upgrade their lodgings. As a result, almost all indicators of housing market activity shot through the roof. The increase in borrowing, spending and investment-linked to housing helped stave off worse macroeconomic outcomes during the depths of the ensuing recession.
The housing market is now showing signs of returning to earth. House price appreciation notched its slowest pace in seven months in September. Building permits and housing starts appear to have peaked in March, with the last five months of data showing a noticeable slowdown. Further, prices for raw materials are responding to normalizing demand. The second-quarter GDP report showed a sharp drop-off in commissions and fees related to sales activity. This is consistent with Canadian Real Estate Association data showing a 15% year-over-year contraction in overall transactions.