Home prices across Canada declined in April for the first time since 2020 as rising interest rates
begin to have an impact on the housing market.
Benchmark home prices fell 0.6% in April from March, the first decline since April 2020,
according to data from the Canadian Real Estate Association (CREA).
At the same time, the number of housing sales in Canada plunged 12.6% in April from a year
earlier.
The declines come as the Bank of Canada raises interest rates to dampen inflation that’s
running at a three-decade high. Markets are betting that the central bank’s trendsetting interest
rate, which began the year at 0.25%, will rise to 3% over the next year.
The sharp jump in Canadian home prices since the pandemic -- up 24% over the past 12
months -- was partly driven by low interest rates that helped stimulate the economy. But now,
rate increases have left the nation’s housing market looking increasingly vulnerable.
An inflationary surge is being seen around the world as supply chain problems combine with
higher commodity prices caused by Russia’s invasion of Ukraine. Assets from stocks to bonds
to cryptocurrencies have plunged in recent weeks as policymakers scramble to drain stimulus
from the economy and get consumer prices under control.
In the housing market, last month’s price declines were heaviest in communities around Toronto
that saw some of the steepest gains throughout the pandemic. The suburbs of Oakville and
Milton saw benchmark prices fall 5.6% in April from the month before, while prices in the city of
London, Ontario fell 4%.
The slowdown in sales activity, meanwhile, was broad-based, with 80% of local markets
nationwide posting a monthly decline in transactions, the CREA data showed.
Canada has just 2.2 months of housing inventory available right now, compared to a longer-
term average of five months, according to CREA.
