Residential property prices in Canada's eleven major cities rose by an rather impressive 8.4% during the year to Q2 2016, up from 4% the previous year and the biggest annual increase since Q2 2010, while home prices increased 4.41% quarter-on-quarter in Q2 2016.
Despite repeated market-cooling measures in Canada, Global Property Guide’s detailed analysis of Canada’s housing market, based on the latest house price figures available, show that Vancouver saw the biggest inflation-adjusted house price increases of 21.5% y-o-y in Q2 2016, followed by Hamilton (12.1%), Victoria (10.8%), and Toronto (10.7%). Winnipeg saw meagre growth of 0.2%.
Biggest falls: Calgary recorded the biggest price drop of 3.9% during the year to Q2 2016, followed by Edmonton (-3.4%), Quebec (-2.9%), Halifax (-2.2%), Montreal (-1%), and Ottawa (-0.1%).
Home sales dropped 2.9% in July 2016 compared to the same period last year, the largest decline since April 2013, according to the Canadian Real Estate Association (CREA). Sales were down from a year earlier in about 60% of all local markets, led by Greater Vancouver, the Fraser Valley, Calgary, and Edmonton.
There were about 4.6 months of inventory on a national basis in July 2016, the lowest level in more than 6 years and an indication that the housing market, especially in British Columbia and Ontario, is increasingly becoming tight.
The Bank of Canada held its key interest rate unchanged at 0.50% in July 2016, after cutting it twice last year in response to plunging oil prices and worsening economic prospects. The key rate had been 1% between September 2010 and December 2014. The central bank will likely hold the key rate unchanged until the first quarter of 2018, given that the economy is still struggling.
Canada's economy shrank by an annualized rate of 1.6% in Q2 2016, the biggest decline since Q2 2009, amidst a decline in exports, especially for energy products, according to Statistics Canada. Battered by the oil price decline Canada's economy grew just 1.2% last year, less than half the 2.5% growth seen in 2014. The economy is expected to expand by 1.5% this year and by 1.9% in 2017, according to the IMF.
For the latest detailed housing market analysis of individual regions and countries, check out the Global Property Guide's global survey for Q2 2016.