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Canada real estate: Housing market breaks two price records

Canada real estate: A
Canada real estate prices are up the most in Ontario and New Brunswick

Canada’s real estate market broke a number of records in January, including prices.

The Canadian Real Estate Association (CREA) says prices rose a record 2.9 per cent month-over-month in January and a record 28 per cent year-over-year.

Ontario prices were up 30 per cent year-over-year as the Greater Toronto Area (GTA) caught up with gains in other parts of the province. Most parts of the province were up between 25 per cent to 40 per cent, while Ottawa was up 16 per cent.

New Brunswick prices were also up 30 per cent, led higher by Greater Moncton but less so by Fredericton and Saint John.

British Columbia prices rose 28 per cent, Prince Edward Island rose 27 per cent, and Montreal was up 20 per cent.

Gains were relatively muted in Manitoba (13 per cent), Newfoundland and Labrador (12 per cent), as were mid-to-high single digits in Alberta and Saskatchewan.

Also See: The latest real estate news for housing prices, mortgage rates, markets, luxury properties and more at Yahoo Finance Canada.

Housing supply can’t keep up with demand

Home sales were up 1 per cent month-over-month. But the number of newly listed homes dropped by 11 per cent. There was a record low 1.6 months of inventory and a record 85 per cent of markets were seller’s’ markets based on sales-to-new listing.

CREA says it doesn’t expect listings to pick up until the weather gets warmer. But supply was overwhelmed by demand last spring.

“The ideal situation between now and the summer would be that a huge surge of sellers come forward looking to sell in the spring 2022 market,” said Shaun Cathcart, CREA’s senior economist.

“If that were to occur, similar to 2021, we’d likely see a massive number of sales take place which would get a lot of frustrated buyers into homeownership, and we’d likely see some cooling off on the price growth side if those offers are spread across more listings.”

Rate hikes could also dampen investor appetite for real estate. The Bank of Canada is widely expected to raise its key overnight rate on March 2nd.

“We have a fundamentally-strong housing market that has been allowed to overheat by too-loose policy,” said BMO senior economist Robert Kavcic.

“It's going to take higher interest rates to alter the market psychology, cool excess demand and price growth. That day is fast approaching.”

Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.

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