August house prices fall at their steepest pace for half a decade
House prices have fallen at their steepest pace for August since 2018 as sellers try to attract interest amid a cost of living squeeze and soaring interest rates.
Average asking prices fell by 1.9 per cent compared with July according to figures from property website Rightmove.
It meant the typical house was on the market for £364,895 – down from £371,907 a month earlier. Prices also fell, by 0.1 per cent, compared to the same month last year – the first year-on-year drop in asking prices since 2019.
And the number of sales being agreed is now 15 per cent lower than in pre-pandemic 2019 ‘as higher mortgage rates mean that some have had to pause their moving plans for now’, Rightmove said.
It is the latest sign that the housing market is being battered by the inflation squeeze on household incomes and an increase in interest rates to the highest level since 2008.
A dip in asking prices is not unusual during August as sellers seek to drum up interest during a quiet period for the market.
But the latest fall is twice the level of the typical 0.9 per cent slide. Rightmove said average asking prices were now £8,000, or 2 per cent, lower than at their peak in May.
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But that follows a strong rise over the last few years and they are 19 per cent, or £59,000, higher than in August 2019.
Rightmove said some sellers were ‘seizing the initiative and heeding their agents’ advice to price competitively for their current local market conditions’.
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Home sales recorded over Canadian MLS® Systems posted a small 0.7% decline between June and July 2023. Activity has been showing signs of stabilizing since May.
While sales were up in July in more than half of all local markets, a decline in the Greater Toronto Area (GTA) tipped the national figure slightly negative. Sales were also down in the Fraser Valley, which together with the GTA off set gains in Montreal, Edmonton and Calgary.
The actual (not seasonally adjusted) number of transactions in July 2023 came in 8.7% above July 2022 – the largest year-over-year national sales increase in more than two years.
“July continued along the same trend we’ve seen emerge in recent months, with sales levelling off and new listings returning in more normal numbers,” said Larry Cerqua, Chair of CREA. “This has been giving buyers more choice and balancing the market, which as of July was also slowing the rate of price growth. If you’re looking for information and guidance about how to buy or sell a property, contact a REALTOR® in your area,” continued Cerqua.
“Following a brief surge of activity in April, housing markets have settled down in recent months, with price growth now also moderating with its usual slight lag,” said Shaun Cathcart, CREA’s Senior Economist. “Sales and price growth are already showing signs of tapering off further in August in response to the Bank of Canada’s mid-July rate hike and messaging regarding above-target inflation for longer than previously expected. We’re probably looking at another round of ʻback to the sidelines’ for some buyers until there’s a higher level of certainty around interest rates going forward.”
The number of newly listed homes was up 5.6% on a month-over-month basis in July. Building on gains of 2.8% in April, 7.9% in May, and 5.9% in June, new listings have gone from a 20-year low in March to closer to (but still below) average levels by mid-summer.
With new listings outperforming sales in July, the sales-to-new listings ratio eased to 59.2% compared to 63% in June and a recent peak of 68% in April. That said, the measure remains above the long-term average for the measure of 55.2%.
There were 3.2 months of inventory on a national basis at the end of July 2023, up a bit from 3.1 months in May and June.
While this was the first month-over-month increase since January, this measure is still a full month below where it was at the beginning of 2023, and almost two months below the long-term average for this measure (about five months).
The Aggregate Composite MLS® Home Price Index (HPI) climbed 1.1% on a month-over-month basis in July 2023—a larger-than-normal increase for a single month but only about half as large as the gains recorded in April, May, and June. This is in line with sales having levelled off as new listings have been recovering.
Despite the smaller gain at the national level, a monthly increase in prices between June and July was still observed in the majority of local markets as has been the case since April.
The Aggregate Composite MLS® HPI now sits just 1.5% below year-ago levels, the smallest decline since October 2022. Year-over-year comparisons will likely tip back into positive territory in the months ahead because prices continued to decline through the second half of 2022.
The actual (not seasonally adjusted) national average home price was $668,754 in July 2023, up 6.3% from July 2022.
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PLEASE NOTE: The information contained in this news release combines both major market and national sales information from MLS® Systems from the previous month.
CREA cautions that average price information can be useful in establishing trends over time, but does not indicate actual prices in centres comprised of widely divergent neighbourhoods or account for price differential between geographic areas. Statistical information contained in this report includes all housing types.
MLS® Systems are co-operative marketing systems used only by Canada’s real estate boards to ensure maximum exposure of properties listed for sale.
About The Canadian Real Estate Association
The Canadian Real Estate Association (CREA) is one of Canada’s largest single-industry associations, representing more than 160,000 REALTORS® working through 72 real estate boards and associations.
Further information can be found at http://crea.ca/statistics.
For more information, please contact:
Pierre Leduc, Media Relations
The Canadian Real Estate Association
Tel.: 613-237-7111 or 613-884-1460