Canadian home prices rise 3.8% to $405,233 average in December
Sales jump 7.9% from the year before, but annual price gain at lowest level in 20 months
A month-to-month drop in existing home sales suggests a cooling real estate market in Canada’s oil-dependent provinces.
According to the Canadian Real Estate Association, prices inched up an average 3.8 per cent on an annual basis to $405,233 in December. That represents the smallest increase since May 2013. Sales activity registered a stronger showing, up 7.9 per cent across the country and above the previous year's levels.
From November to December, though, sales fell 5.8 per cent on average, with declines in nearly two-thirds of all markets.
Western sales slump in December
Calgary and Edmonton suffered the worst drop, suggesting the plunging price of oil is starting to impact those housing markets.
"Given the uncertain outlook for oil prices, it's no surprise consumer confidence in Alberta softened and moved some homebuyers to the sidelines," said CREA chief economist Gregory Klump.
In Calgary, home sales were down 24.6 per cent monthly. That mirrors a similar trend in Edmonton (down 26.4 per cent), Regina (down 12.3 per cent) and Saskatoon (down 12.2 per cent).
Even the consistently hot real estate market in the Greater Toronto Area experienced a sales decline of just under five per cent.
Calgary prices were still up 8.8 per cent on an annual basis, according to CREA. Prices in the GTA gained 7.9 per cent annually, and Greater Vancouver prices were up by 5.8 per cent. Prices were down on an annual basis in Regina by 3.5 per cent.
It’s no surprise consumer confidence in Alberta softened.- Gregory Klump, chief economist, Canadian Real Estate Association
"The slump in oil prices is likely to trigger a housing downturn in commodity-driven markets, like Calgary and Edmonton — markets that were once expected to be among the strongest," wrote Diana Petramala of TD Economics in a research note.
Existing home sales can be expected to "flatten out" in 2015, wrote Petramala, who forecasts price growth to slow to two per cent in the year to come.
In a forecast published at the beginning of the week, realtor Royal LePage said it expects Canadian home prices to gain an average of 2.9 per cent in 2015.
For all of 2014, more than 480,000 homes traded hands — the strongest annual level in seven years, according to CREA.
With files from Canadian Press