Current Pace Of Canada’s Housing Market Recovery “Unsustainable”
Canada’s housing markets continued to recover in May, with sales and new listings rising on a monthly basis.
However, with the Bank of Canada (BoC) seemingly back on its rate hike campaign, economists predict the positive momentum may be short lived. According to the latest data from the Canadian Real Estate Association, national home sales climbed 5.1% from April to May, continuing the upward trajectory that began in February, while prices jumped 2.1%, the second consecutive monthly increase. It’s likely that both will rise further in June, due to the 6.8% increase in new listings seen in May.
While the stabilization in housing activity, and subsequent uptick in prices, was expected as the correction that began last spring came to an end, the magnitude and speed at which the market is recovering has taken experts aback.
Robert Hogue, Assistant Chief Economist at RBC, believed that activity would rebound slowly to start, as ongoing affordability issues held prospective purchasers back. However, after the BoC pressed pause on interest rate hikes in March, sidelined buyers returned to the market en masse, thinking the move would be long-lasting.
