Recent data release shows Canadian real estate prices have shown its sharpest rate of decline in Q3 2017, noted by the Federal Reserve Bank of Dallas.
This is a deep marked contrast to the situation where just a few months ago, the Canadian housing market boasted of the fastest rising prices.
This is the first time in over five years that Canadian real estate prices have declined for a quarter. Despite the quarterly decline, prices still remain significantly higher than the year before.
According to information, the Dallas Fed data stated that Canadian real estate prices fell by 3.82% in the third quarter of last year, the largest single-quarter decline since the early 1990s and the first since 2012 which implied the largest single-quarter decline in the world at the time.
Canadian real estate prices dropped the most since the early 1990s, according to the Dallas Fed. Real home prices, a.k.a. home prices adjusted for inflation, fell 3.82 per cent in the third quarter of 2017. The single quarter decline is the first decline since 2012, and the largest since the first quarter of 1991. This is the largest single quarter decline in the world according to the Dallas Fed’s global index. The second largest decline they observed was in Italy, where prices fell 0.38 per cent in the quarter.
Better Dwelling explained that these developments might represent “the beginning of a broad market correction, like that seen in 1990.”
He added, “despite the large quarterly decline, Canadian real estate prices are still much higher. The index is 7.44% higher than the same quarter last year, almost twice as much as the aggregate index for other countries.
“The increase is quickly tapering from peak growth observed in the first quarter of 2017. The quarterly decline is significant, but even so, the market is out performing many other markets.”
Perhaps the most important aspect to consider is that the decline occurred starting approximately 6 months before the OSFI’s revised mortgage rules were introduced in a bid to cool conventional mortgage borrowing.
“The rule changes add significant uncertainty to the market, especially after prices are starting to look a little softer.”
Image Source: National Post