April 4, 2018 / 6:58 PM / 4 months ago

UPDATE 1-Home sales fall in Canada's two largest real estate markets

(Adds Vancouver numbers)

By Julie Gordon

April 4 (Reuters) - Home sales continued to sag in Canada’s main real estate markets, as tighter mortgage rules and higher borrowing costs dampened demand in Toronto and Vancouver, data showed on Wednesday.

Toronto home sales tumbled 39.5 percent in March from the previous year, while Vancouver sales fell 29.7 percent, according to data from the Toronto Real Estate Board (TREB) and the Real Estate Board of Greater Vancouver (REBGV).

Vancouver’s market was also impacted by new and expanded taxes introduced by British Columbia in February, as part of the provincial government’s crackdown on foreign and domestic speculators blamed for soaring housing prices.

Together, the Vancouver and Toronto regions account for about half of house sales by volume in Canada.

Sales of detached homes in Vancouver fell 37 percent, while condo sales were down 26.7 percent, as demand cooled and fewer homes were listed, REBGV said.

In Toronto, sales of detached homes plunged 46.3 percent and condo sales dropped 32.7 percent, as many would-be buyers put their plans on hold, TREB said.

The average selling price in the Toronto area was C$784,558 ($613,799), down 14.3 percent from C$915,126 in March 2017, though up 2.1 percent from February 2018.

The average selling price for a detached home, the most expensive segment of the market, plunged 17.1 percent, while the average condo price rose 6.1 percent.

In Vancouver, the average selling price for a detached home slid 6.2 percent, while the average selling price in the red hot condo segment was up 22.8 percent.

Demand for expensive detached homes has been cool in both cities as tax measures, along with stricter lending requirements and higher mortgage rates, have weighed.

At the same time, demand in the cheaper condo segment has remained strong, as buyers scramble to gain a foothold amid rapidly escalating prices and limited supply.

New listings fell 12.4 percent in Toronto and 6.6 percent in Vancouver.

“Even with lower demand, upward pressure on prices will continue as long as the supply of homes for sale remains low,” said REBGV president Phil Moore in a statement.

The Bank of Canada has raised interest rates three times since last July and another hike is expected later this year, and stricter lending rules took effect on Jan. 1.

The benchmark price, preferred by analysts because it smoothes out the composition of sales, was up 1.5 percent year-over-year in Toronto, and up 16.1 percent in Vancouver.

$1 = 1.2782 Canadian dollars Reporting by Julie Gordon in Vancouver; Editing by Kim Coghill and Diane Craft

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