Canadian real estate prices rise as supply hits all-time low

Real estate prices in Alberta and Manitoba are up in the mid single digits, compared to 30% in Ontario and New Brunswick. (Photo by Artur Widak/NurPhoto via Getty Images)

Real estate prices in Canada hit a 21-year high in 2021 as the supply of homes for sale hit an all-time low.

The Canadian Real Estate Association says prices rose 26.6% nationally year over year in December, and 2.5% month over month.

Ontario is up about 30% year over year. Prices in the Greater Toronto Area have made a comeback after lagging in other parts of the province that were less well known before the extraordinary price spike attracted more people looking for a housing outside major urban centres.

Rising prices in Ontario are nothing new, but even New Brunswick is up 30% year over year, led by Greater Moncton.

Prices in British Columbia have increased by more than 25%.

Sales were down 9.9% year over year and were flat month over month.

The number of newly listed homes fell 3.2% month over month. The sales-to-new listings ratio tightened to 79.7%; the long-term average is 54.9%. There were 1.6 months of inventory at the end of December 2021, the lowest level on record.

Also see: The latest real estate news for home prices, mortgage rates, markets, luxury properties and more from Yahoo Finance Canada.

Canadian real estate in 2022

“With the housing supply issues facing the country only worsening at the start of 2022, take any dip in sales at the start of the year with a grain of salt as demand has not gone away, there just won’t be much to buy until a bit later in the spring,” said Cliff Stevenson, CREA President.

“But when those listings start to appear, this year’s Spring Market will almost certainly be another big headline.”

Cailey Heaps, president and CEO of the Heaps Estrin team, says buyers gave up at the end of the year, but are ready to try again.

“Everything indicates that 2022 is off to a good start. My feeling is that sellers who choose to enroll in Q1 2022 will be enthusiastically received by the market and rewarded accordingly,” Heaps said.

BMO Senior Economist Robert Kavcic says 2021 was the year Canadian real estate “got out of balance”. He expects the Bank of Canada to act in 2022.

“Investor expectations and appetite have taken over Canadian housing in 2021. We know it, and policymakers know it now too,” Kavcic said.

“Look for 100 basis points of tightening from the Bank of Canada this year to help clean up some of the foam.”

Jessy Bains is a Senior Reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.

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