Canada's housing markets ended 2018 with a thud, with sales falling for the fourth straight month in December, the Canadian Real Estate Association (CREA) said Tuesday.
The nationwide average house price fell to $472,000, down 4.9 per cent from a year earlier. This doesn't mean prices are falling nationwide; rather, the slowdown in Toronto and Vancouver means fewer of the expensive homes there figure into the calculations, dragging down the average.
Nationwide home sales in December were 19 per cent lower than a year earlier. However, that compares to December 2017, when there was a mini-rush of homebuyers scrambling to buy homes before new mortgage rules kicked in.
Even so, sales were still 12 per cent below their average for the month.
Watch: Canada's most expensive condo just got a serious price cut. Story continues below.
Sales fell in about 60 per cent of all local markets, led by Greater Vancouver, Vancouver Island, Ottawa, London/St. Thomas and Halifax-Dartmouth, CREA reported.
"What a difference a year makes," CREA President Barb Sukkau said in a statement.
The new mortgage stress test "has weighed on sales to varying degrees in all Canadian housing markets and it will continue to do so this year," she added.
Among major cities, very few are still seeing price growth. The Teranet house price index, a separate measure of housing prices from CREA's data, shows that prices fell in nine of 11 major Canadian cities in the fourth quarter of 2018.
Only Montreal and Ottawa-Gatineau are still seeing rising prices.
But it's a different story in many smaller cities near larger metro areas. CREA data shows that benchmark prices were still on the rise at the end of last year in cities near Toronto such as Guelph, the Niagara Region and Hamilton-Burlington.
Areas relatively close to Vancouver, such as the Fraser Valley, Vancouver Island and Victoria, also continue to see rising prices, even as the benchmark price in Vancouver fell 2.7 per cent in the past year, CREA's data showed.
Meanwhile, Prairie cities including Calgary, Edmonton and Regina "are in full-fledged stagnation mode already, to varying degrees," Bank of Montreal senior economist Robert Kavcic wrote in a client note.
"In fact, these boom-bust markets are undergoing more of a slow and agonizing melt at the moment, and there's little reason to believe conditions will dramatically change this year."
"Atlantic Canada was mixed in 2018, with sales rising in New Brunswick and Nova Scotia, but falling in P.E.I. and Newfoundland and Labrador," he noted.
Fitch sees 'sharp slowdown' worldwide
In a report issued Tuesday, global credit ratings agency Fitch warned of "a sharp property price slowdown in 2019" around the world, with Canada's housing markets among the worst-performing.
Fitch sees house prices rising by 0.5 per cent in Canada in 2019, one of the lowest growth rates among 24 countries it looked at. Only Australia, China, Italy, South Korea and Sweden are expected to have weaker housing markets.
Despite the recent cooling, "the Vancouver and Toronto markets remain vulnerable to a more severe price correction in the event of an economic stress," Fitch said.
"Cumulative price gains since 2015 of about 50 per cent have far outpaced underlying housing fundamentals."
Fitch expects mortgage growth to fall to 1 to 2 per cent in Canada this year, which, if it happens, would be among the lowest rates of growth in records going back to 1990.
Earlier on HuffPost Canada:
Still, Canada's housing market will avoid total disaster thanks to a strong job market, Fitch predicted.
Despite evidence that Canadian consumer insolvencies are on the rise, Fitch doesn't see this turning into a mortgage debt crisis. It expects mortgage arrears to rise to a still low 0.3 per cent, from 0.25 per cent currently.
The agency has little good news for Canada's prospective homebuyers.
"Because fewer people now qualify for mortgages, rental demand has risen and rents in Toronto and Vancouver, in particular, have surged over the past year," the agency wrote.
"Higher rents may increase demand for home purchases, but Fitch expects fewer renters to qualify for mortgages."