OPINION: National house price inflation has shed some momentum in recent months as Vancouver continues to deflate. Canada’s priciest city experienced its third consecutive monthly decline, and more is in store. The price drop so far was mostly concentrated in dwellings other than condos. This is consistent with house sales decline (since their February peak) mostly concentrated in detached dwellings (top chart). In contrast, according to Toronto Real Estate Board, existing home sales reached another record in 2016, while the market faced a very tight supply (middle chart). We have yet to see it, but sooner or later, low affordability and the new ruling regarding the qualification for an insured mortgage will take some steam out of demand and prices. In the meantime, Toronto, Hamilton and Victoria are the three metropolitan regions pulling up the Composite index growth month after month. Apart from Vancouver and these three regions, house prices have been flat over the last six months (bottom chart).

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