Post Category: Monthly Reports
September 18, 2020

Firming of the composite index in August

In August the Teranet–National Bank National Composite House Price IndexTM was up 0.6% from the previous month, a gain just short of the 22-year average of 0.7% for the month of August. If the typical seasonal variations are taken out (seasonal adjustment), the resulting index for August is by our estimate up 0.4%, following consecutive declines in June and July. The rise of the 11-market composite index was led by Victoria (2.3%), Ottawa-Gatineau (2.2%), Montreal (1.9%), Halifax (1.8%), Hamilton (1.6%) and Winnipeg (0.7%). Trailing the countrywide average were rises for Quebec City (0.5%), Vancouver (0.2%), Toronto (0.1%) and Edmonton (0.1%). The index for Calgary was flat from the month before.

Another sign of firming markets is the number of sale pairs entering into the 11 metropolitan indexes[1] in August, only 1.3% down from a year earlier after three months of 12-month declines in excess of 20%. This development echoes the revival of homes sales reported by the Canadian Real Estate Association in June after severe slowdowns in previous months due to Covid-19. The catching up has intensified since then. The unsmoothed composite index for August[2] would, if seasonally adjusted, be up 1.7% from July, suggesting that the uptrend of the published (smoothed) index could persist.

The August composite index was up 5.7% from a year earlier, an acceleration from July. The 12-month gain was led by Ottawa-Gatineau (12.6%), Halifax (11.1%), Montreal (10.1%), Hamilton (8.4%) and Toronto (7.3%). Lagging the countrywide average were Victoria (3.3%), Winnipeg (3.3%), Vancouver (3.2%) and Quebec City (2.4%). Down from 12 months earlier were Edmonton (−2.4%) and Calgary (−2.5%).

Besides the Toronto and Hamilton indexes included in the countrywide composite, indexes exist for seven other urban areas of the Golden Horseshoe – Barrie, Guelph, Brantford, Kitchener, St. Catharines, Oshawa and Peterborough. Indexes for all seven were up from the previous month and from a year earlier. The 12-month gains ranged from 5.7% for Guelph to 12.5% for Brantford.

Indexes not included in the composite index also exist for 13 markets outside the Golden Horseshoe. Seven are in provinces other than Ontario: Abbotsford-Mission and Kelowna, B.C.; Lethbridge, Alberta; Trois-Rivières and Sherbrooke, Quebec; and Moncton and Saint John, N.B. The August indexes for these seven markets were all up from the previous month and from a year earlier. The 12-month gains ranged from 1.0% in Lethbridge to 7.6% in Moncton.

The six Ontario markets outside the Golden Horseshoe are London, Kingston, Belleville, Windsor, Thunder Bay and Sudbury. Their August smoothed indexes were all up from both the previous month and from a year earlier. The 12-month advances ranged from 4.8% in Thunder Bay to 9.2% in Kingston.

As the table at the end of this report shows, the indexes of 30 of the 31 metropolitan markets surveyed were up on the month in August, the exception being Calgary. It was the strongest diffusion of monthly gains since 2009, i.e. over the whole period for which we have indexes for all 31 markets.

[1] The Teranet–National Bank House Price Index is based on the repeat-sales method, i.e. on the change in price between the two most recent sales of properties that have been sold at least twice.

[2] The published indexes are smoothed: they present the average changes in the last three months of the raw indexes. Further information on methodology is available at 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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