Canadian Housing Market Experiences a Downturn Ahead of Rate Cut
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Loading... - Gregor Berger
- 28 Jun 2024
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In May, Canada's housing market exhibited a lackluster performance ahead of an anticipated interest rate cut from the Bank of Canada, which could potentially alleviate some of the pressures faced by buyers.
According to data released Monday by the Canadian Real Estate Association, the benchmark price of a home decreased by 0.2 percent from April, settling at $714,300 (US$519,700). Compared to the same time last year, prices have dropped by 2.4 percent. Additionally, home sales declined by 0.6 percent from April, as buyers hesitated due to some of the highest interest rates seen in two decades.
This slump occurred just before the Bank of Canada reduced its key interest rate earlier this month, making it the first major central bank to begin easing rates and hinting at further cuts to come. These lower rates could potentially address the housing affordability challenges that have troubled buyers throughout the year.
“May was another sleepy month for housing activity in Canada, although it may prove to be the last of those now that interest rates have moved lower,” stated Shaun Cathcart, the national real estate board’s senior economist. “The psychological effect for many who have been sitting on the sidelines was no doubt huge. The question now turns to further rate cuts – specifically, how fast, and how far?”
For those buyers re-entering the market, there may be more properties to consider. The number of newly listed properties increased by 0.5 percent in May compared to the previous month, according to the real estate association’s data.
