Canadian house prices rose 25% in November from a year earlier, a record gain that was driven by a historic supply shortage.
An increase in properties for sale from October to November wasn’t enough to satisfy demand, according to data from the Canadian Real Estate Association (CREA), which said its benchmark sale price climbed 25% to $790,600 during the month.
Low mortgage rates and demand for larger living spaces during the pandemic combined to make Canada one of the hottest housing markets in the world over the last two years.
Now, with the Bank of Canada indicating that interest rates could rise next year and with a record flow of immigrants entering the country, buyers seem to have found new incentives to get into the housing market.
Home sales in Canada rose 0.6% in November from the month before, while newly listed properties rose 3.3%, the data shows. Even with the increase in listings, Canada had just 1.8 months of housing inventory nationally in November, tied with March of this year for the lowest level on record.
Construction began on more than 300,000 new homes during November, one of the strongest on record and a sign that developers are starting to respond to the housing shortage.
Prime Minister Justin Trudeau promised more homebuilding on his path to re-election in September. But much of the decision-making that drives development rests with local and provincial governments that have authority over zoning.
In forecasts released with the November sales data, CREA predicted that prices would continue to rise throughout 2022.
