Canada home resales drop sharply in May, prices rise - CREA

Thu Jun 15, 2017 9:52am EDT
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By Andrea Hopkins

OTTAWA (Reuters) - Resales of Canadian homes dropped 6.2 percent in May from April, with Toronto sales plunging 25.3 percent, as new housing policy changes side-swiped demand and new listings rose again, the Canadian Real Estate Association said on Thursday.

The industry group said actual sales, not seasonally adjusted, were down 1.6 percent from May 2016, while home prices were up 17.9 percent from a year earlier, according to the group's home price index.

It was the first full month of housing resale data since the province of Ontario introduced a 16-point plan to rein in the hot housing market in Toronto, Canada's largest city, amid fears of a bubble.

The changes included a 15-percent foreign buyers tax similar to one imposed in Vancouver in 2016.

"(The results) provide clear evidence that the changes have resulted in more balanced housing markets throughout the Greater Golden Horseshoe region (around Toronto),” said Gregory Klump, CREA's chief economist.

"For housing markets in the region, May sales activity was down most in the GTA (Greater Toronto Area) and Oakville. This suggests the changes have squelched speculative home purchases," Klump added.

The industry group said the drop in sales pushed the sales-to-new listings ratio out of sellers' territory and back into balance for the first time since late 2015.

The ratio fell to 56.3 percent in May, down from 60.2 percent in April and about 10 percentage points below the first three months of the year. A ratio between 40 and 60 percent is consistent with a balanced housing market.   Continued...

FILE PHOTO: A woman walks towards a "for sale" sign of a home that has been sold in Toronto, Canada, June 29, 2015. REUTERS/Mark Blinch/File Photo