After contracting for the previous seven months, the Teranet- National Bank composite index put an
end to this downward sequence with an increase of 0.4% in August. This growth comes against a
backdrop in which the number of transactions on the resale market continued to rise for a fifth
consecutive month in August (top chart). In particular, the very soft market conditions observed in
Ontario tightened somewhat with the recent pick-up in transactions, allowing prices to rise during the
month in Toronto, Hamilton and Ottawa-Gatineau. Despite this growth in August, the composite
index still remains 4.6% below its December level, with declines over this period of 7.9% in Toronto,
7.4% in Hamilton and 1.5% in Ottawa-Gatineau. Market conditions also eased significantly in British
Columbia, with Vancouver and Victoria posting declines of 7.1% and 0.4% respectively. Against the
backdrop of the current trade dispute, market resilience has depended on differing levels of
affordability. Indeed, the markets with the highest affordability challenges saw the sharpest declines,
as the financial risk of such a large real estate transaction was amplified by economic uncertainty
(bottom chart). Although the composite index returned to growth in August, it is still too early to say
whether this trend will continue in the months ahead, despite the expected cuts in the Bank of
Canada’s policy rate. Continuing uncertainty, moderating population growth, the risk of persistently
high long-term interest rates, and a potentially further deterioration in the labour market will continue
to weigh on the housing market.