Post Category: Monthly Reports
November 15, 2017

The Teranet–National Bank Composite House Price Index™ retreated 1.0% in October

In October the Teranet–National Bank National Composite House Price IndexTM was down 1.0% from the previous month, a second consecutive monthly decline and the largest since September 2010. The retreat was due to a 2.8% drop of the index for the Toronto market, the country’s largest. Indexes were also down on the month for five other metropolitan areas of the composite index: Hamilton (−1.8%), Edmonton (−0.7%), Winnipeg (−0.7%), Ottawa-Gatineau (−0.3%) and Calgary (−0.2%). Indexes were up on the month for Halifax (1.3%), Vancouver (0.7%), Quebec City (0.6%), Montreal (0.4%) and Victoria (0.1%). For Toronto’s index it was the third straight monthly decline and for Hamilton’s the second, in both cases following 18 consecutive monthly gains. The declines of the Calgary and Edmonton indexes ended runs of six monthly gains, that of the Ottawa-Gatineau index a run of five gains. The Vancouver, Victoria and Montreal indexes were at record highs in October.

The raw index for Toronto fell 1.1% in October, markedly less than in August and September. The cumulative drop from the June peak was 8.5%. This retreat is quite consistent with recent loosening of conditions in the Toronto market. Since this loosening has consisted of a shift from a very tight to a balanced market, current market conditions are far from those typical of an economic recession.

The index for Vancouver dropped after the August 2016 implementation of a tax on acquisitions by foreigners. But the market remained tight and by the beginning of this year the index had regained the lost ground. It has risen to new records in each of the last six months. Victoria’s has risen to a new record for an eighth straight month.

Among 14 markets not included in the countrywide composite index, indexes were down on the month for all but one of the 12 in Ontario, the exception being Kingston.

In October the composite index was up 10.0% from a year earlier, the smallest 12-month rise since June 2016. It was the third consecutive deceleration from the record 12-month gains of 14.2% in both June and July. The October 12-month rise was led by Toronto (13.4%), Hamilton (15.7%), Vancouver (12.0%) and Victoria (14.4%). With this result Vancouver has rejoined the ranks of markets whose indexes have risen more than the countrywide average. The 12-month advance was much smaller in Montreal (6.5%), Ottawa-Gatineau (5.0%), Halifax (1.9%), Calgary (1.8%), Edmonton (0.8%), Quebec City (0.6%) and Winnipeg (0.1%).

Index values were up from a year earlier in all 14 of the markets not included in the composite index, though the 12-month increase ranged widely – from 1.0% in Thunder Bay to 23.6% in St. Catharines–Niagara.

*Note on methodology: The current-month data used to calculate the index are those of closed sales registered in the provincial land registry. To illustrate the home price trend, the published indexes of the 11 metropolitan markets entering into the Teranet–National Bank Composite House Price Index™ are moving averages of the last three months of raw indexes, a procedure that evens out month-to-month fluctuations. More granular monthly data are available upon request, subject to subscription fees. For our full methodology, please visit www.housepriceindex.ca

 

Metropolitan area Index Level
% change m/m % change y/y From peak Peak date
Report By:

Marc Pinsonneault
Senior Economist
Economics and Strategy Group
National Bank of Canada

The Teranet-National Bank House Price Index™ thanks the author for his special collaboration on this report.

The historical data of the Teranet-National Bank House Price Index™ is available™ at www.housepriceindex.ca.

The Teranet-National Bank House Price Index™ is estimated by tracking observed or registered home prices over time using data collected from public land registries. All dwellings that have been sold at least twice are considered in the calculation of the index. This is known as the repeat sales method; for a complete description of the methodology, contact us.

The Teranet-National Bank House Price Index™ is an independently developed representation of average home price changes in eleven metropolitan areas: Victoria, Vancouver, Calgary, Edmonton, Winnipeg, Hamilton, Toronto, Ottawa-Gatineau, Montréal, Québec City, Halifax. The national composite 11 index is the weighted average of the eleven metropolitan areas. The weights are based on aggregate value of dwellings as retrieved from the 2011 Statistics Canada Census. According to that census1, the aggregate value of occupied dwellings in the metropolitan areas covered by the indices was $1.168 trillion, or 53% of the Canadian aggregate value of $2.207 trillion.

All indices have a base value of 100 in June 2005. For example, an index value of 130 means that home prices have increased 30% since June 2005.

1 Value of Dwelling for the Owner-occupied Non-farm, Non-reserve Private Dwellings of Canada.
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The Teranet-National Bank House Price Index™ is an independently developed representation of the rate of change of Canadian single-family home prices.  The measurements are based on the property records of public land registries. The monthly indices cover eleven Canadian metropolitan areas: Victoria, Vancouver, Calgary, Edmonton, Winnipeg, Hamilton, Toronto, Ottawa-Gatineau, Montréal, Québec City, Halifax. The metropolitan areas are combined to form a Canadian composite index.

In addition to their informational role, the Teranet-National Bank House Price Index™ was developed to be a benchmark for financial professionals. Teranet and NBC offer licenses covering all index-linked products.

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Kan Zhu
Leader, Data & Advisory Solutions
Teranet Inc.
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Michael Pertsis
Director, Mortgage Derivatives
National Bank Financial
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