Higher borrowing costs continued to weigh on British Columbia’s housing market as sales and home prices fell month-over-month in May.
While the province’s median home price rose more than 9 percent year over year to just over $1 million, it was down 6 percent from April’s $1.065 million, according to the British Columbia Real Estate Association.
Sales also fell, the association noted, with 8,214 homes changing hands last month, down about 35% from May and 8% from April.
“Canadian mortgage rates continue to rise,” BCREA chief economist Brendon Ogmundson said in a press release accompanying the data. “The average rate on a five-year fixed-rate mortgage hit 4.49% in June. This is the highest mortgage rate since 2009.”
B.C. isn’t the only company seeing a slowdown in the housing market. Activity was also cool in other provinces, with major cities like Toronto (where house prices fell for the third straight month in May), Montreal and Calgary.
Home sales in Vancouver fell nearly 10 per cent in May from April to 2,918, a 32 per cent year-over-year decline, according to the Real Estate Board of Greater Vancouver. Home prices in B.C.’s most populous city were relatively unchanged in May at $1.26 million.
The Bank of Canada’s rate hikes have so far raised the overnight lending rate to 1.5 per cent, suggesting the bank may need to further curb inflation, which could put upward pressure on mortgage rates. Higher rates are keeping more potential buyers on the sidelines.