Housing market feels impact of HST introduction

TORONTO -- The new harmonized sales tax introduced in British Columbia and Ontario last month had an immediate impact on the housing market, according to the Canadian Real Estate Association.

The Ottawa-based group, which represents 100 boards across the country, said July sales plunged 6.8% on a seasonally adjusted basis from a month ago, a decline “almost entirely the result of fewer sales in British Columbia and Ontario.”

The slowdown had been expected as consumers rushed to buy homes ahead of the July 1 implementation in those provinces. The HST only applies to services used in purchasing and selling an existing home, such as real estate commission, and not the actual sale price.

In British Columbia sales dropped 14.1% from a month ago on a seasonally adjusted basis and Ontario the decline was 8%. The two provinces accounted for 85% of the the change in national activity.

“The soft sales figures we’re seeing right now can be attributed in part to accelerated home purchases earlier in the year,” said Georges Pahud, CREA president.

The group noted the drops in sales was smaller than in previous months with the Prairie provinces and Quebec staying even with June levels.

However, sales are showing they cannot keep pace with the blistering activity of the second half of 2009. Actual July sales dropped 30% from a year ago when activity set a record for the month. Still, for the first seven months of this year sales remain up 5.6% from a year ago. CREA warned activity will be off for the rest of of 2010 on a year-over-year basis.

“Activity may remain at lower levels for some time, but ultimately we expect a more stable market to emerge, with demand coming back into line with economic fundamentals, said Mr. Pahud. “While the outlook for economic and job growth remains generally positive nationally and in all provinces, the pace of the recovery will vary by region.”

The housing market continues to get a boost from supply dropping which is expected to keep prices stable. The seasonally adjusted number of new residential listings fell 7.2% in July from June — the third consecutive month-over-month decrease and the steepest drop in more than a decade.

But the impact on prices, which are the now relatively flat, was minimal. The average price of a homes sold in July was $330,351, just a 1% increase from a year. Again, CREA said the lack of activity in B.C. and Ontario, which included two of the country’s most expensive marketed, likely skewed average prices down.

On province-by-province basis, prices also dropped in Nova Scotia and Prince Edward Island but every other province had gains above the national average.

Overall inventory is climbing. The number of months of inventory, which represents the number of months it would take to sell current inventories at the current rate of sales activity, was seven month in July. A year ago the number was 4.4 months.

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More signs the Toronto housing market is cooling off

The Toronto Star
Published On Thu Aug 5 2010
By Tony Wong

Business Reporter Home sales in the Toronto market are cooling rapidly off in the second half of the year, with a 34 per cent drop in July compared to a year earlier.

This is the third consecutive month of falling sales, according to figures released by the Toronto Real Estate Board today.

In June, sales had dipped by 23 per cent. But this has been the steepest drop yet, with sales dipping to 6,564 in July compared with 9,967 a year earlier.

“The level of July sales remained below the expected long term trend. The market has become more balanced,” said TREB president Bill Johnston.

Total sales through the first seven months are still up by 12 per cent, thanks to record sales during the first half of the year.

The average price for July transactions was $420,482, representing a six per cent increase over last year.

Meanwhile, building permit figures for Toronto released by Statistics Canada today also show that developers are less bullish about the housing market moving forward.

Building permits in the Toronto area fell by 15.3 per cent in June over May thanks to a drop in residential building intentions in both the single detached and high rise segments. Non-residential buildings such as commercial and industrial projects showed an increase, but not enough to offset the drop in residential permits.