A Canadian Real estate Association (CREA) study revealed sales of residential properties recorded a 17.4 percent decline in December 2012. However, the market was holding steady even with the drop in sales as prices of homes continued to be high in the country.
Home sales in Canada dropped due to the introduction of tightened mortgage rules in the country in July 2012. Almost every state in Canada witnessed sales drops except Calgary, which experienced a 7.2 percent growth in home sales. Vancouver and Toronto recorded the highest sales dips at 31.1 percent and 22 percent respectively, reports The Star.
The total number of new home listings also dropped to 1.3 percent, which was the lowest since March 2011. Total home trading activity was also down by 1.1 percent when compared to the figures of 2011, reports Property Wire.
However, economists explain the market cooling is for the best and it will not pose a threat to the economy as home prices are still riding high on the market. A classic house in Toronto now costs seven times the average median price of a Canadian property. Home prices also escalated by 6.9 percent in Calgary. Prices were observed to be the highest in Regina with a 15.9 percent hike since December 2011.
Real estate analysts and firms are positive about the markets in the coming spring because that time of the year is the busiest for the property market. The boom is still prevalent in the sector and is expected to remain balanced in the next few months.
However, with the rigid mortgage rules and sales rates declining, the market could crash.
"We're coming off a decade-long housing boom in this country, and for sales to still remain this strong is pretty good," Sal Guatieri, economist at The Bank of Montreal told The Star. "If we do see the spring market roaring back, in some ways we would be comforted, but I think we'd be more worried about the possibility of a bubble and that could trigger a further tightening of mortgage rules which could hit as interest rates do start to move up over the next few years."
