News : Canadian home sales, despite seeing a slight recovery from August, fell 15.1% year-on-year in September, while new figures sparked concerns that the country is in the debt ‘danger zone’.
The Canadian Real Estate Association (CREA) said on Monday that the decline in sales was due to tighter mortgage lending rules and an uncertain economy.
The association noted that sales in September were up 2.5% from August (the first month-on-moth gain since March) but still remained well below the volumes of September 2011. Prices rose a scant 1.1% year-on-year in September, although this figure is skewed by Vancouver’s extremely sluggish market.
Against this background of apparent market weakness, Statistics Canada published figures on Monday that showed the average household having only 63 cents of disposable income for every dollar of debt.
This is the highest ratio ever recorded in Canada – and it is even more inflated than the levels recorded in the US and the UK before the housing collapse in the mid-noughties.
However, Canada has aspects in its favour that the US did not, reported the Globe and Mail: more equity in their homes (near 70%) and a scarcity of high-risk subprime mortgages. The news site said that the rate of non-mortgage debt is already slowing and experts expect the same to happen with mortgage debt.