The Toronto housing market saw an unexpected increase in sales and house prices in April, however the results across Canada vary by province and city. 

In Toronto, sales increased from 7,159 units in March to 9,042 units and the average (nominal) housing price also increased to $820,148. The last time average price crossed the $800,000 mark was in October 2018. In BC, housing markets are still adapting too stringent regulations and sales continued to struggle. Urban housing markets in Alberta and Saskatchewan are lower than they were five years ago.

The MLS Composite Home Price Index (HPI) Benchmark Price, which takes into account size and structure type, reported year-over-year declines for greater Vancouver and neighbouring housing markets. HPI reported a modest year-over-year increase in Victoria. 

Calgary and Edmonton reported modest year-over-year increases whereas sales jumped by 28% and 18% in Regina and Saskatoon respectively. However, the smaller size of the prairie market means that it would only take a few hundred additional sales to significantly move the needle. Despite the increase in sales, prices are declining in Alberta and Saskatchewan. The falling housing prices have lasted much longer in the prairies than elsewhere.

Housing markets in Ottawa and Montreal are distinct from other large cities. Not only have they reported modest year-over-year increases in April —7.7% and 6.3% in Ottawa and greater Montreal respectively — prices have increased moderately over the five-year horizon. Renters dominate the Montreal housing market and this has likely contributed to a modest increase in demand for owner-occupied housing resulting in a moderate increase in housing prices. Ottawa is likely to have benefitted from the large number of federal government employees who constitute a big part of the regional labour force and whose numbers and incomes are more stable, which prevents rapid demand shocks.

Across Canada, housing sales in April were up by 4.2% year-over-year. The national HPI though faltered slightly by 0.3%. Higher sales in April 2019 relative to the same month last year are encouraging, but come off a relatively low reference point: sales in April 2018 were the lowest for an April in the past seven years.

The diverse spectrum of housing outcomes in large cities indicates that local housing markets are not on the same cycle. While it is tempting to have a one size fits all policy response to housing market challenges, tailoring regulatory interventions to address local market needs would be a better approach.

Source: Financial Post