The Canadian Real Estate Association's House Price Index rose by 26.6 per cent in the 12 months up to December, the fastest annual pace of gain on record. The average price of a Canadian home that sold in December was $713,500.
The group, which represents more than 100,000 realtors and tabulates sales data from homes that listed and sell via the Multiple Listings Service, said the supply of homes for sale at the end of the month hit an all-time low.
Canada's housing market has been on an absolute tear for the past two years, as feverish demand from buyers wishing to take advantage of rock-bottom interest rates has drastically outpaced the supply of homes to buy. That imbalance is a major factor contributing to higher prices, as buyers have to pay more and more to outbid others because of the lack of alternatives.
High prices don't seem to be slowing demand, however, as 2021 was the busiest year for home sales ever. Some 666,995 residential properties traded hands on MLS last year, smashing the previous annual record by 20 per cent. At the current sales pace, all listings would be gone in less than two months. Under normal conditions, there's a five-month supply of homes for sale. With interest-rate pull-forward behaviour keeping demand so strong, and supply struggling to keep up, it's little wonder why prices are continuing their relentless upward march.