FINANCIAL POST FEBRUARY 16, 2011
Sales of existing homes rose in January to the highest level since April 2010, led by Vancouver, Toronto and Victoria, the Canadian Real Estate Association said Tuesday.
The 4.5 per cent increase in monthly national sales comes just weeks before the federal government is set to impose tougher mortgage rules aimed at curbing Canadian household debt and preventing the kind of housing bubbles experienced in other countries.
The seasonally adjusted gains during the month were led by Vancouver, at 14.2 per cent, and Toronto at 4.9 per cent. Greater Victoria increased by 4.7 per cent, slightly above the national average.
Gregory Klump, CREA's chief economist, said "we anticipated the recent announcement of tighter mortgage regulations . would pull forward sales activity into the first quarter of 2011, particularly in some of Canada's more expensive housing markets.
"The sharp rise in sales activity in Toronto following the announcement provides early evidence confirming this," he said.
The industry group said seasonally adjusted sales totalled 39,481 homes in January, up from 37,773 the previous month but down 6.4 per cent from 42,169 a year earlier. "This was the smallest year-over-year decline since May 2010," the industry group. "National sales activity has improved steadily since last summer, and now stands almost 25 per cent above the low point reached in July 2010," CREAsaid.
The national average sales price was $343,675 during the month. "While this is little changed compared to the previous three months, it represents an increase of 4.5 per cent compared to January 2010" when the average price was $328,728.
Much of the year-over-year gain was due to a jump in multi-million-dollar home sales in some areas in Greater Vancouver, it said.
In January, Finance Minister Jim Flaherty announced the government was reducing the maximum amortization period for government-backed mortgages to 30 years from 35 years, and that buyers would only be able to borrow 85 per cent of the value of homes, down from 90 per cent. In addition, the government would withdraw backing for lines of credit secured by people's homes.
The new rules take effect March 18. They follow changes last year that required borrowers to meet lending standards for five-year fixed-rate mortgages, even if the buyer wanted a shorterterm, variable-rate loan.
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Over the last 30 days, 197 single family houses were sold, up by 20 houses from last week.
