Canada’s Housing Market Gains, But Is It Already for Good?

Sales and prices, as well as construction of new homes in Canada, have slowly picked up in July, but analysts and housing experts remained wary the trend could be sustained.

Unofficial data on Canada's state of housing market showed that some states reported experiencing increases in July. Vancouver reported a 40.4 per cent jump in sales of existing homes over the Multiple Listing Service from a year ago. Toronto and Calgary likewise reported impressive gains of 16 per cent and 17 per cent, respectively, versus figures from last year.

"In Vancouver, sales have recovered to their highest level since 2010," Diana Petramala, Toronto-Dominion Bank economist, was quoted by the Globe and Mail, noting residents and ultimately sales have recovered from the changes Finance Minister Jim Flaherty made to the mortgage insurance rules in 2012.

Still, analysts continue to adopt a wait-and-see attitude based on how they perceived consumers' recent behaviours.

Ms Petramala in a research note said mortgage rates have risen 60 basis points since mid-June. Thus, "home buyers with a preapproved mortgage are likely jumping into the market to take advantage of record-low interest rates."

"After flirting with outright declines for much of 2012 and earlier this year, average home prices were up almost 5 per cent year over year in June, and we suspect the gain was closer to 6 per cent for July, the fastest pace in almost two years," Douglas Porter, Bank of Montreal economist wrote, in a research note.

An indicator of questioned sustain was the sales of new condos. Urbanation, which tracks the Toronto condo market, said sales of new condos in the state was down 18 per cent in July compared from a year ago. Developer-bought residential lands to build houses and condos likewise slid in Toronto by 51 per cent, in Vancouver by 30 per cent in Vancouver, and in Calgary by 52 per cent as of July 2013.