An autumn chill is gripping Canada’s housing
market. The September figures from the Canadian Real Estate Association show
home sales plunged more than 15% compared to a year ago. More than half of the
markets in the country reported a drop of at least 10%. The slump is being
pegged to Ottawa’s tighter mortgage rules. September sales were up 2.5%
compared to August, though.
Even though sales are down prices managed to edge upwards by 1.1%, to an
average of $355,777. That number was actually held down by declines in
Vancouver. When Vancouver is excluded prices climbed more than 3%.
While the federal government’s efforts to cool the housing market appear to be
working, efforts to rein-in household debt don’t. Canada’s household
debt-to-income ratio shot to 163.4% in the 2nd quarter, up from about 162% in
the Q1. The figures have surged from the 150% range because of changes in
calculation methods, but the quarter-over-quarter increase indicates homeowners
aren’t acting on warnings about unsustainable debt levels. The debt-to-income
ratio in Canada is now higher than it was in Britain and the U.S. preceding
housing busts that hit both of those countries.