Alia McMullen
Sun
Canada‘s housing market continued to soften in January amid declines in both the price and sales of existing homes, particularly in B.C., Ontario, and Alberta, figures from the Canadian Real Estate Association showed Friday.
“The deepening recession, which began in earnest among exporters, is now more forcefully dragging down the domestic side of the economy,” said Douglas Porter, the deputy chief economist at BMO Capital Markets. “The ongoing sharp drop in home sales points to further declines in prices as well as a deeper pullback in new home building.”
Existing home sales fell a seasonally adjusted 3.1 per cent to 26,300 units in January, following a 1.8-per-cent decline in December, and were down a sharp 37.3 per cent from January last year. In this environment, fewer people planned to sell their home, with new listings down three per cent from December and 14 per cent from January last year.
Despite this decline, Derek Holt, an economist at Scotia Capital, said the supply of unsold homes on the market was still too high relative to demand, putting downward pressure on prices. The average house price dropped 11.3 per cent from a year earlier.
He said the data reflected a further deterioration in the national housing market, which deepened alongside the rise in unemployment and increasing pressure on consumer spending.
“The fact that Canadian consumer finances are at their most stressed point since the early 1990s recession adds to the downsides facing the consumer sector,” Holt said.
About 52 per cent of Canada‘s largest markets reported a decline in house prices from January 2008. Calgary was the worst hit, with prices down 11.4 per cent over the year, followed by an 8.8-per-cent drop in Vancouver, an 8.2-per-cent fall in Toronto, a 2.2-per-cent decline in Montreal and a 1.8-per-cent slide in Ottawa.
Calvin Lindberg, the president of CREA, said he was confident stimulus measures in the 2009 federal budget would help lift the sagging housing market. And he said there were still buyers and sellers in the residential market.
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