Post Category: Research
June 03, 2020
Home affordability deteriorated slightly in Q4 2019

The streak of improvements in home affordability in major Canadian urban centers came to
an end after three quarters with a slight deterioration in Q4 2019. While mortgage interest
rates were essentially unchanged from Q3, income growth was unable to keep pace with the
rise in home prices for the urban composite. The later registered its strongest increase in more than 2 years. Among the 10 urban centers covered, only Vancouver and Winnipeg saw income
increasing faster than housing prices during the quarter. Vancouver was the only market
showing an improvement in affordability, the monthly mortgage payment as a percentage of
income registering a fourth consecutive decline, a first since 2008-2009 when the global
economy was mired in a recession. While our national housing affordability composite index
stands on the cusp of its two-decade average, we note significant divergence in affordability
among urban centers. Indeed, despite some ameliorations over the past year, the Vancouver,
Toronto and Hamilton markets are still exhibiting affordability concerns while all other markets are either in-line with their historical norms or even better. The widespread improvement in affordability occurred in 2019 thanks to an 85 basis points decline in mortgage interest rates and one of the smallest increases in home prices among OECD countries (+1.2%, see chart page 13). That said, we doubt that a further improvement in home affordability is possible at this point as we see interest rates levelling off and home prices should accelerate given tight supply in the resale market. Indeed, the national active listings to sales ratio is at its lowest since 2007Q2, a level generally associated with worsening affordability.

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Post Category: Monthly Reports
May 20, 2020
A swan song before Covid-19 infects the indices?

In April the Teranet–National Bank National Composite House Price Index™ was up 1.3% from the previous month. As in February and March, that was double the average gain of the last 10 Aprils. Leading the countrywide average rise were the metropolitan markets of Ottawa-Gatineau (2.4%), Toronto (2.0%), Halifax (1.8%), Montreal (1.7%), Victoria (1.2%), Hamilton (1.1%) […]

Post Category: News and Press Releases
May 20, 2020
A swan song before Covid-19 infects HPI?

Based on home sales reported in land registries, resale prices rose at the fastest rate for a month of April since 2010. Moreover, if we consider the 11 metropolitan areas included in the Composite index and 14 other metropolitan areas for which a HPI is available, the index increased in 22 of these 25 regions, the highest diffusion of monthly gains in nine months. Of course, given that the Canadian economy entered into a recession following sanitary measures taken in order to prevent the spread of COVID-19, it is not likely that this momentum will persist. The Canadian unemployment rate went from 5.6% in February to 13% in April, and is expected to remain elevated at least up to the end of next year. In this context, demand for housing may decrease due to a reduction in immigration and would-be first-time homebuyers not being able to qualify for a mortgage loan. At the opposite, supply may be fueled by homeowners unable to meet mortgage payments and for that reason will look to sell their home. In other words, a lasting high unemployment rate could mean downward pressure on house prices.

May 2020

Post Category: Monthly Reports
April 20, 2020
Another strong increase in the Composite Index in March

In March the Teranet–National Bank National Composite House Price IndexTM was up 0.6% from the previous month. As was the case in February, this was double the average March rise of the last 10 years. Leading the advance were the markets of Ottawa-Gatineau (1.1%), Vancouver (1.0%) and Toronto (0.9%). Trailing the countrywide average were rises […]

Post Category: News and Press Releases
April 20, 2020
Covid-19 likely to infect national HPI

At the national level, resale home prices were still gaining momentum in March. But this is based on home sales reported in land registries. Home sales reported by real estate boards are timelier, being recorded soon after the sale becomes unconditional. The most important real estate boards all mentioned a clear break of activity during the second half of March due to measures to contain propagation of COVID-19. This was confirmed when CREA reported a monthly drop in home sales from February to March in 25 of the 26 major Canadian markets, with sharp declines in most of the markets covered by the Teranet-National Bank HPI. This cooling of activity should soon be reflected on the house price indexes. We expect the loss of momentum to be more prevalent in the metropolitan markets located in Central and Eastern Canada (Toronto, Hamilton, Ottawa-Gatineau, Montreal and Halifax) which so far have pulled the national HPI up.

April 2020

Post Category: News and Press Releases
March 18, 2020
Home resale market was gaining momentum prior to Covid-19

At the national level, resale home prices were gaining momentum in February. The 0.4% monthly gain in the Composite index was double the average of the previous ten years for a month of February. In particular, after 12 consecutive monthly declines, Vancouver HPI rose in each of the last five months, reflecting the fact that Vancouver resale market recently returned to balance. Sure, we still saw weakness in other regions, such as the Prairie Provinces (Alberta, Manitoba and Saskatchewan) where markets were still favorable to buyers. But CREA just reported a rather generalized increase in home sales in February, including for Calgary and Edmonton. Unfortunately, then came the outbreak of Covid-19 and its impact on oil prices and disruptions in the supply chain. The unprecedented sanitary measures imposed by the authorities to tackle the pandemic will severely impact business activity and jobs over the coming months. In that situation, the home resale market should be heavily curtailed for the coming months.

March 2020

Post Category: Monthly Reports
March 18, 2020
A vigorous gain for a month of February

In February the Teranet–National Bank National Composite House Price IndexTM was up 0.4% from the previous month, a rise that was double the average of the last 10 Februarys. Component indexes were up for seven of the 11 markets surveyed – Montreal 1.1%, Vancouver 0.8%, Halifax 0.8%, Toronto 0.4%, Victoria 0.2%, Winnipeg 0.1% and Ottawa-Gatineau […]

Post Category: News and Press Releases
February 20, 2020
National index pulled up by Central and Eastern markets

Canada’s resale home prices continued to rise in January. The HPI of five of the six markets located in Central Canada or in the East (Montreal, Toronto, Hamilton, Ottawa-Gatineau and Halifax) performed well over the last year, the exception being Quebec City. At the opposite, the five righthand charts show negative (Vancouver, Calgary Edmonton) or barely positive (Winnipeg, Victoria) y/y HPI growth. The sub-index for Central and Eastern Canada grew 5.2% over the last 12 months, against a 2.5% fall for the Western sub-index. This is consistent with the various conditions prevailing on the regional markets in Canada. Based on the active-listings-to-sales ratio published by CREA, home resale markets in the Prairie Provinces (Manitoba, Saskatchewan and Alberta) are buyers’ markets, while markets in Ontario, Quebec and the Maritimes Provinces (Nova Scotia, New Brunswick and Prince Edward Island) are sellers’ markets. Recently, the Vancouver market went from favorable to buyers to balanced. The behaviour of Vancouver Teranet-National Bank HPI, which rose over the last four months, is consistent with this improvement in market conditions.

February 2020

Post Category: Monthly Reports
February 20, 2020
The 12-month rise of the national index has been supported by Eastern Canada

In January the Teranet–National Bank National Composite House Price IndexTM edged up 0.1% from the previous month, a so-so showing for a month of January. In only three of the last 10 years (including last year) has the January change been lower. The composite index was braked this January by declines of the indexes for […]

Post Category: Monthly Reports
January 20, 2020
2019: Vigour returns, except in the Prairies

In December the Teranet–National Bank National Composite House Price IndexTM was up 0.2% from the previous month. This was a good showing for a month of December, equalled or bettered in only three of the last 13 years.  The composite index for the month was braked by declines of the indexes for Calgary (−0.6%), Edmonton […]