OPINION: In June, the monthly rise in home prices was the strongest in a decade, with all markets except for Calgary and Edmonton experiencing gains above the historical norm. What is even more striking is that this surge occurred after strong gains in the previous months. As a result, on a year-to-date basis, home prices are already up a whopping 6.8%, well above the historical average of 4.0% for the first six months of the year. On a year-over-year basis, the dichotomy continued in the Canadian housing market with gains for the sub-index which includes Toronto, Vancouver, Victoria and Hamilton accelerating over 16% while deflation persisted in the seven other regions covered (top chart). In regards to the continued strength in Vancouver and Toronto, it’s worth noting that both labour markets are still booming, a sharp contrast with what we observe in the rest of the country (middle chart). Employment at record highs combined with record low supply (bottom chart) and mortgage rates continue to fuel home price inflation in those markets.

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