There’s no sign yet of the market slowdown some experts have predicted
Eric Beauchesne
Sun
OTTAWA — The hot housing market — which was supposed to cool down this year — just keeps getting hotter, with the real-estate industry reporting that home sales continued to soar last month despite record-high prices.
Sales of existing residential properties hit a 14-month high in May of 28,288, up 0.7 per cent from April and the fourth highest monthly level on record, the Canadian Real Estate Association reported Wednesday.
Adjusted for seasonal ups and downs, sales hit all-time highs in Saskatoon, and surpassed all previous records for May in Vancouver, Calgary, Winnipeg, Montreal, Quebec City and St. John’s, Nfld.
And so far this year, sales are at an all-time high in 11 cities, including Victoria, Calgary, Edmonton and Montreal.
The average selling price hit a new all-time high of $269,127, up 8.2 per cent from a year earlier, and hit record highs in Vancouver, Edmonton, Toronto, Montreal and Halifax-Dartmouth. Helping push up prices was a 2.6 per cent drop in properties for sale from what had been a 14-year high in April.
“More news about high monthly sales activity and rising home prices might sound a bit like a broken record if it were not for the significant strength and stamina of housing demand,” said association chief economist Gregory Klump.
“The statistics speak volumes,” he said, noting that sales were just 2.8 per cent below the all-time high hit in July 2003 despite what has been a near 20-per-cent increase in the average selling price of a home since then.
Analysts have been forecasting a slowdown in housing this year because a lot of the pent-up demand has been met, while rising interest rates later this year along with the increase in housing prices that has already taken place will make home ownership less affordable.
And Bank of Canada Governor David Dodge warned again Wednesday that interest rates will eventually rise — although he refused to say when.
The news of the further surge in sales and home prices last month comes on the heel of a report from CIBC World Markets that warned that even a slowdown in the housing market would hurt the economy because real estate has been one of the “most powerful economic engines of recent years.”
However, Klump said the factors that have fuelled the housing boom over the past few years remain in place.
“We are continuing to see the powerful combined effect that low and steady interest rates, job growth and high consumer confidence have on housing markets,” he said.
“Recent cuts to mortgage interest rates will continue to support strong activity in the months ahead, especially now that short-term consumer lending rates are likely to remain stable over the summer.”
© The Vancouver Sun 2005
