London-area home sales fall to 10-year low as interest rates rise

Only 504 homes sold in the London area last month — the lowest on record for October in the last decade — while the average home price increased for the first time since February, new figures released Thursday show.

Though home sales dropped to their lowest point in the last 10 years, the number of new listings — 975 — remained on par with the average for October, according to the latest market snapshot by the London and St. Thomas Association of Realtors (LSTAR) .

The decline in home sales is concerning for the short term, said Randy Pawlowski, LSTAR’s president.

“I think what has happened is folks are on the sidelines watching to see what’s happening with these interest rates, and that has slowed the pace of sales activity. And, two, the average sale prices have been declining, perhaps not as rapidly as what we saw at the start of the year,” he said.

The Bank of Canada has been increasing its key interest rate to combat inflation. The central bank’s benchmark interest rate has climbed to 3.75 per cent from 0.25 per cent in early March.

Still, there are signs the market “is stabilizing,” Pawlowski said.

The average selling price for a home increased slightly from $635,250 in September to $640,570 last month — ending a seven-month streak of falling prices. October’s average price is 4.1 per cent less than a year ago, but nearly 22 per cent higher than in October 2020, LSTAR figures show.

“I think there is a real, strong demand of interest from prospective buyers out there. They’re just cautious with the interest rates at the moment,” Pawlowski said.

Another promising indication is October’s sales-to-new-listings ratio, which climbed to 51. 7 per cent from 42. 4 per cent the month prior. “We are seeing the listings come to market and sell in a relatively short period of time,” Pawlowski said.

Single-family homes remained the hottest commodity on the market last month, with about 363 sold, followed by townhouses with 73 sold.

Despite seeing the lowest number of units – 37 – sold in October, the average price for an apartment condo in the London region has increased, unlike single-family homes and condominiums that saw a year-over-year decrease, Pawlowski noted.

The average price for an apartment condo in the LSTAR region, which takes in London, St. Thomas, Strathroy and portions of Elgin and Middlesex counties, jumped to $416,516, up eight per cent from October of last year, figures show.

“We’re seeing a ton of activity in the apartment sector,” Pawlowski said.

“A lot of the buildings that seem to be going up are mostly rental-type buildings rather than condo apartments. Those prices do tend to fluctuate quite a bit, depending on where things are in the planning process for some of those buildings and where they’re at with pre-sales versus rental numbers.”

Housing supply in the region’s market held steady with 3.2 months of inventory in October, down slightly from 3.4 the month prior, and 1,620 active listings.

“There is lots of inventory out there to choose from, and that’s generally a good sign,” Pawlowski said, noting there is a “strong demand” from buyers within our city and other centers.

“When you look at the average sale prices not only across the province but across the country, London still remains relatively affordable in comparison, so I think we’re in good shape,” he said.