The national average price for homes sold in July was C$353,147, down 2 percent from a year earlier. CREA said average prices were up in about 70 percent of local markets, but lower prices in Greater Vancouver continue to impact the national average.
CREA said the local markets that it tracks across the country were about evenly split between those that saw gains from June and those that saw declines. Vancouver prices were down 12.2 percent year-on-year. The latest statistics were the first since the government tightened mortgage rules last month in an effort to rein in the market.
“Some first-time home buyers may have difficulty qualifying for mortgage financing due to shortened amortization periods included in recent changes to mortgage regulations,” said Gregory Klump, CREA’s chief economist.
“As the lynchpin of the housing market, lower first-time buying activity will have knock-on effects over the rest of the market. It will likely take more time for move-up buyers to sell their current home.”
CREA President Wayne Moen said the data released on Wednesday confirms expectations that the new mortgage rules would temper sales and prices in Greater Toronto and Greater Vancouver.
The data was in line with a report from Canada’s federal housing agency o n Tuesday t hat said the country’s robust housing market is expected to soften over the next few months and into 2013, with a slowdown in the pace of housing starts.
Canada did not experience the housing market crash during the financial crisis that helped push the United States and other Western countries into recession.
While the Canadian market did pull back in 2008, it rebounded swiftly on the back of low interest rates. The boom, however, has worried policymakers, who fear the formation of an asset bubble.
Many economists and realtors believe the soft landing that policymakers have sought to engineer is starting to take shape, despite interest rates remaining near record lows. The slowdown comes after a robust, three-year climb in Canadian home prices and booming construction of condominiums.