Post Category: Monthly Reports
January 12, 2018

The House Price Index stopped retreating in December

In December the Teranet–National Bank National Composite House Price IndexTM  edged up 0.2% from the previous month, interrupting a three-month run of declines. However, only five of the 11 metropolitan markets surveyed showed index increases. The one-tick rise of the composite index was due to a 1.3% jump of the index for the large Vancouver market. The other indexes showing gains were Winnipeg (1.9%), Halifax (1.9%), Ottawa-Gatineau (0.4%) and Edmonton (0.1%); without Vancouver their combined gain would not have offset the combined decline of the indexes for Toronto (−0.3%), Victoria (−1.0%), Calgary (−0.6%), Hamilton (−0.5%) and Montreal (−0.2%). The index for Quebec City was flat.

For the Toronto index it was a fifth consecutive decline. However, the raw index*  for Toronto rose 0.2% in November and 0.1% in December. If it edges up again or stays flat in January, the sequence of monthly declines of the smoothed index would then be interrupted. The upticks of Toronto’s raw index in the last two months of 2017 can be laid to the desire of some buyers to acquire housing before January 1, when a new and stiffer eligibility rule comes into effect on qualification for an uninsured mortgage.

For the Vancouver index it was an eighth consecutive month without a decline, a period over which it rose 13.2%. That breaks down as 16.7% for condos and 10.2% for other housing. Vancouver, Winnipeg and Halifax were the only indexes to reach a new record in December.

In December the composite index was up 9.1% from a year earlier, the smallest 12-month gain since May 2016 and the fifth straight deceleration from record 14.2% gains in June and July. The December 12-month rise was led by Vancouver (16.0%), Victoria (11.5%), Hamilton (11.3%) and Toronto (9.0%). Montreal’s 12-month gain was 7.0%, less than the countrywide average but noteworthy. The 12-month advance was well above the rate of inflation in Ottawa-Gatineau (5.1%), Winnipeg (4.0%) and Halifax (3.6%). It was much smaller in Calgary (0.5%), Quebec City (0.4%) and Edmonton (0.2%).

Among 14 markets not included in the composite index, indexes for Sudbury, Guelph and St. Catharines–Niagara were down for a third consecutive month, the index for Oshawa for a fifth. All 14 markets were nevertheless up from a year earlier, though the 12-month increase ranged widely, from 3.8% in Thunder Bay to 19.0% in London.

[*]  Note on methodology: The current-month data used to calculate the index are those of closed sales registered in the provincial land registry. The indexes of the 11 metropolitan markets entering into the Teranet–National Bank Composite House Price Index™ serve to illustrate trends: their published values are smoothed, resulting from a moving average 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, possibly subject to subscription fees. For more on our 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.

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