Data from the Canadian Real Estate Association (CREA) showed that the average price rose 16.2 percent from one year prior, representing the highest annual rate of increase since 2006. At the same time, the number of new listings for sale fell by 8.7 percent year-over-year.
The ever-tighter supply is largely responsible for the jump in prices, as there were more buyers than sellers in the mix. Many provinces, such as Ontario and British Columbia, saw "super-heated" increases in prices due to the limited supply. The province of Alberta saw prices rise 10.3 percent year-over-year, with inventory levels reaching the lowest level since the mid-1980s. The strong demand coupled with low interest rates drove prices upwards.
However, some regions did see slower growth. New Brunswick, Prince Edward Island, Saskatchewan, and Quebec all experienced more moderate growth rates, in comparison to other provinces.
The impact of the pandemic has had an effect on Canada's housing market. CREA noted that "the strong year-over-year gain in MLS® sales is likely related to some extent to the impact of the COVID-19 pandemic on consumer preferences and behaviour." The pandemic has turned many potential buyers away from urban areas, and towards suburban and rural areas where they can have more space to work from home and simultaneously be closer to nature.
Despite the regional variations, Canada's overall housing market is still hot. Homebuyers should be aware of this and consider the factors that are driving prices upwards when making their purchase decisions. Buyers should also keep in mind the potential risks associated with high prices and low inventory, such as the risk of overpaying or the difficulty in obtaining a mortgage approval.
In September of 2021, Canada's housing market saw a surge in home prices, as the number of available homes decreased significantly compared to a year ago. As demand outstripped supply, average home prices rose by 16.2 percent on a year-over-year basis – the highest annual rate of increase since 2006. Meanwhile, new listings for sale fell by 8.7 percent year-over-year. The upswing was most pronounced in Ontario and British Columbia, but slower growth was observed in other provinces such as New Brunswick, Prince Edward Island, Saskatchewan, and Quebec.
The main driver of the rising prices was the tighter supply of homes due to the COVID-19 pandemic, as consumer preferences and behavior shifted away from urban areas and towards suburban and rural areas with more space and natural beauty. With many buyers vying for a limited number of homes, the competition resulted in higher prices. Low interest rates also played a role in driving prices upwards.
The situation remains hot in the Canadian housing market. Buyers should take note of the potential risks involved, such as the possibility of overpaying or difficulty in getting approved for a mortgage. It is important for buyers to understand the underlying factors driving prices and make informed decisions accordingly.
This article was contributed on Nov 04, 2023
