Home prices declined 0.6% in April from the month before, the first drop since April 2020, says the Canadian Real Estate Association.
Benchmark home prices declined 0.6 per cent in April from the month before, the first drop since April 2020, according to data released Monday from the Canadian Real Estate Association. The number of sales, meanwhile, plunged 12.6 per cent.
The shift is coming as the Bank of Canada embarks on an aggressive campaign of rate increases to fight inflation that has soared to a three-decade high. Markets are betting that the policy interest rate, which began the year at 0.25 per cent, will have to rise to 3 per cent over the next year. The sharp jump in Canadian home prices since the pandemic — they are up 24 per cent over the past 12 months — was partly driven by emergency-low rates that helped the economy through the Covid-19 crisis. But now rate increases have left the nation’s housing market looking increasingly vulnerable.Article content
“Following a record-breaking couple of years, housing markets in many parts of Canada have cooled off pretty sharply over the last two months, in line with a jump in interest rates and buyer fatigue,” Jill Oudil, chair of the real estate association, said in a news release accompanying the data. An inflationary surge is being seen around the world as supply chain problems combine with higher commodity prices caused by Russia’s invasion in Ukraine. Assets from stocks to bonds to cryptocurrencies have plunged in recent weeks as policy makers everywhere scramble to drain stimulus from the economy and get consumer prices under control.
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