Home sales in Vancouver and B.C. are outpacing the vast majority of Canada, with the benchmark price in Vancouver growing 8.6% higher than the national average.
The year-over-year price change for home sales in Canada has been led by a steady growth in the red hot real estate markets of southern B.C. and Greater Toronto, according to new statistics released by the Canadian Real Estate Association. The national average sale price rose 8.3% between October 2014 and 2015, while Vancouver’s prices grew 15.33%, far outpacing those markets in Central and Eastern Canada, save for Toronto.
The Greater Toronto region increased by 10.33% while nearby neighbour Ottawa only grew by a fraction at 0.54%.
In fact, the Vancouver and Toronto markets account for 70% of the nation’s growth, according to the CREA. If those markets were removed from the national analysis, the average home price would only be $339,059, rather than the current $505,900, and would have grown only 2.5%.
The benchmark price for a home in Vancouver for October was at $736,000, up 1.9% from September. Rapid growth is also taking place in the Fraser Valley which is well on its way to replicating Vancouver’s growth rate at 1.71%. However, homes in the Valley have a long way to go before reaching Vancouver levels; the benchmark price in October was much lower at only $480,700.
Markets that have seen a decrease over the last year include Calgary, Regina and Saskatoon, with Regina falling almost 4.3% year-over-year. Elsewhere across the country has seen modest growth, including Montreal and Vancouver Island. Fancy a house in Moncton, New Brunswick? It may only set you back $157,300, but that’s already 7.1% higher than it was last October.
The disparity in home prices across the country is mostly due to economic struggles in the resource sector, according to Gregory Klump, the CREA’s chief economist.
“Local economies tied most closely to natural resource prices are experiencing weaker economic conditions compared to more diversified economies. Home price gains in Greater Vancouver and Greater Toronto reflect the balance between supply and demand – a balance which is among the tightest of Canada’s largest urban markets,” he said.
Low interest rates are also keeping Canada’s home sales afloat, but may be doing more harm than good for those looking to get into the real estate market in Vancouver.
“The continuation of low interest rates is supporting home sales activity,” said Pauline Aunger, president at the CREA. “Even so, the strength of sales activity varies by location and price segment across Canada.”
As always, the detached home price segment is leading the pack with exponential growth in Vancouver. That’s all due to supply and demand, says Klump. Compared with condominiums, there is much less supply for detached homes where markets are hot, and that’s not going not change anytime soon.
“For that reason, price gains for single detached homes should continue to outstrip those for condo apartment units for some time,” said Klump.
Earlier this month, the Real Estate Board of Greater Vancouver announced the number of home sales in the region in October grew by almost 20% compared to last year.
“Home sales are more than one-third above what’s typical for this time of year, yet the supply of homes for sales is the lowest we’ve seen in five years,” Darcy McLeod, president of the Real Estate Board of Great Vancouver said at the time. “This activity has created favourable market conditions for anyone considering selling their home today.”
Favourable for sellers, yes, but not nearly so for first-time buyers.