Canada’s home prices slide most since 2005

Bloomberg

Canadian home prices saw their biggest monthly decline in at least 17 years as the impact of higher interest rates began to spread across the country.
The benchmark price of a home falls 1.9% in June versus the previous month, according to data by the Canadian Real Estate Association. That’s the third straight month of falling prices, and the biggest one-time drop in data going back to 2005.
With inflation running at the highest level since the early 1980s, the Bank of Canada has rapidly increased the cost of borrowing, boosting its policy rate to 2.5% from 0.25% since the beginning of March. That has caused an abrupt turn in the market as more buyers find themselves unable to secure financing. Sales fall 5.6% on a monthly basis in June.
Greater Toronto, the country’s largest city and the center of its financial industry, has seen benchmark prices fall 4.5% in three months to C$1.21 million (about $928,000). But the declines are steepest in the cities and towns around Toronto that gained the most during the Covid-19 pandemic as people used the freedom of remote work to move further away.
Oakville, a western suburb, has seen a 10% price drop in the last three months, while prices in the city of London, Ontario, about a two-hour drive away, have declined 13%.
But the downturn is becoming more broadly based, too, with cities from Montreal to Winnipeg to Vancouver seeing lower prices in June compared with May. Nationally, the June price decline was an acceleration from the 0.5% drop seen in May and a 1% fall in April.
It’s the first time since 2019 that national home prices have fallen for three consecutive months, though the soft patch is coming after a record-breaking two years for the Canadian housing market in which the benchmark price jumped 50%.