Post Category: Monthly Reports
August 20, 2019
Smallest 12-month rise in almost 10 years

In July the Teranet–National Bank National Composite House Price IndexTM was up 0.7% from the month before. As in the two previous months, the gain was not really a sign of countrywide market vigour, since the 21-year average for the month is 1.0%. As in May and June, it was only because of seasonal pressure […]

Post Category: News and Press Releases
August 20, 2019
Home price deflation about to ebb in Western Canada?

The national HPI has grown at a below-inflation rate of 0.4% over the last 12 months, the smallest gain since November 2009. However, the weakness is not regionally broad-based. The national HPI has been depressed by Vancouver’s index loss of 6.2% during this period, corresponding to a 12-month string without a gain. Other Western metropolitan areas (Victoria, Calgary, Edmonton, and Winnipeg) also contributed to slow the national HPI. At the opposite, annual index growth has been decent in most of the six regions located in the central and eastern part of the country. The fact that the national HPI registered gains over the last three months does not mean that the market has turned the corner. Indeed, the three latest rises were weak compared to the 21-year average for those months. If seasonally adjusted, the national HPI would been down in these months this year. That being said, the recent rebound in home sales across Canada was also felt in the Western part of the country. This should help limit home-price deflation in this region.

August 2019

Post Category: Research
August 12, 2019
Biggest improvement in a decade for housing affordability

Affordability improved in Q2 by the most since 2009 as measured by the urban composite index. All the observed markets registered an amelioration in the quarter (left chart). The most significant factor to this development was the decline in  mortgage rates. Indeed, the free-fall in financings costs was the most substantial since 2010Q3. This combined with a healthy labour market producing income growth on the scale of 1.7% in the quarter and home prices declining 1.0% meant that all inputs contributed to the improvement in housing affordability. Vancouver experienced the largest progression in affordability among urban markets in Q2. Toronto essentially mirrored the situation in Vancouver with a large improvement in the non-condo market and some progress also in the condo market. The decline in mortgage rates combined with a robust labour market reduced the risk of a correction in home prices in the coming months. That being said, there are still some headwinds limiting upside on home prices. Despite the recent progress in Vancouver and Toronto, these markets remain unaffordable on a historical basis (right chart). Moreover, while the contractual mortgage rate declined 68 basis points since last December, the qualifying rate declined only 15 basis points meaning that most potential new buyers excluded by B-20 measures still are.

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Post Category: Monthly Reports
July 18, 2019
Without the seasonal boost, the composite home price index would have been down in June

In June the Teranet–National Bank National Composite House Price IndexTM was up 0.8% from the month before. The rise was on the small side for a month of June – the 21-year average for the month is 1.2%. As in May, it was only because of seasonal pressure that the index rose at all. If […]

Post Category: News and Press Releases
July 18, 2019
Almost no annual growth for national HPI

The national HPI has grown at a below-inflation rate of 0.5% over the last 12 months, the smallest gain since November 2009. Moreover, the fact that monthly gains are reported for May and June does not mean that the market recently turned the corner. These two months typically register the strongest growth rates in a year. Indeed, the two latest rises were among the weakest in history for months of May and June. If seasonally adjusted, the national HPI would been down in both months this year. However, the weakness is not regionally broad-based. The national HPI was dragged down by 12-month home price declines in Western Canada metropolitan areas (Vancouver, Calgary, Edmonton and Winnipeg) and a tiny increase in Victoria. In Central Canada and in the East, home price growth ranges from decent to strong. This is consistent with the state of home resale markets. For example, the Vancouver market turned favorable to buyers at the end of last year, while the Toronto market remained balanced and Montreal’s market has never been this tight since 2005. That being said, a rebound in home sales recently occurred in Canada which was also felt in the largest Western metropolitan areas. This should help limit home-price deflation in these areas.

July 2019

Post Category: Research
June 26, 2019
Housing affordability improves in 2019 Q1 amid healthy labour market

Affordability improved in Q1 by the most since 2014 as measured by the urban composite index as eight of the ten urban markets progressed in the quarter (left chart). The healthy labour market was the largest contributor to this development via a significant increase in income (+1.0%) that outpaced the increase in home prices (+0.3%) – left chart. Coincidentally, mortgage rates were not a drag on affordability for the first time in 7 quarters. Vancouver experienced the largest improvement in affordability among urban markets in Q1 but that was mostly due to declining home prices. We continue to expect price weakness in this market as resale conditions remain favourable to buyers in both the condo and non-condo segments so far in Q2. In Toronto, the composite is showing a slight improvement but this is solely due to the non-condo segment. Indeed, condo market affordability deteriorated further with prices jumping 2.0% in Q1 as the imbalance between supply and demand favoured sellers. Looking ahead, there is hope for further improvement in affordability in Canada in Q2 given the recent drop in mortgage rates.

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Post Category: Monthly Reports
June 19, 2019
Home price index up in May for the first time in nine months

In May the Teranet–National Bank National Composite House Price IndexTM was up 0.5% from the month before,[1] the first monthly gain in nine months. On the other hand, for a month of May it was the smallest rise in 21 years of index history. If seasonally adjusted, the index would have been down 0.4% on […]

Post Category: News and Press Releases
June 19, 2019
The national HPI grew at its slowest annual pace in this cycle

One should not rejoice about the first rise in home prices in seven months as May is
historically the second strongest month of the year. In effect, the 0.5% increase
represents the weakest performance on record for a month of May. As a result, the
annual increase moderated to 0.7%, the lowest since the recession (see left chart). While
a combination of stress testing measures, foreign buyer’s taxes and earlier increases in
mortgage rates have contributed to the slowdown, recent data shows that the Canadian
housing market is stabilizing. Home sales increased for a third month in a row in May,
rebounding close to their past ten year average, a development which was made possible
thanks to a booming labour market and a plunge in mortgage rates. In Toronto, both
condos and other dwellings prices showed pullbacks in May but resale market conditions
(see right chart) are not suggestive of a significant deterioration in the coming months
especially since the GTA created a whopping 92K jobs so far this year. The Vancouver
market showed the weakest performance on an annual basis among covered markets (-
4.1%, y/y) but its job market is also firing on all cylinders in 2019 a development that
could have contributed to the strong rebound in resales observed in May (+24%).

June 2019

 

Post Category: Monthly Reports
May 14, 2019
April: Eighth consecutive month without a rise in the composite index

In April the Teranet–National Bank National Composite House Price IndexTM was flat from the previous month.[1] Apart from the 2009 recession period, it was the first April in 21 years of index history in which home prices showed no rise. And the run of months with no rise in the composite index has now extended […]

Post Category: News and Press Releases
May 14, 2019
Is the resale market stabilizing?

While the Composite Teranet-National Bank HPI dropped again in April, there are signs of stabilization. April’s decline in the Composite index is the smallest in months. The cumulative decline over this seven-month stretch is only 1.8%, a moderate loss compared to the 2008-2009 recession, and even compared to shorter sequences of drops that occurred since then (left chart). The moderation of the recent price decline at the national level is partly due to Toronto, where the index edged down only 0.2% over that seven-month period. The resilience of the home resale market in the largest urban area in Canada is due to the performance of the condo segment, where the index was up 2.1% over the period (right chart). Judging from the active-listings-to-sales ratio, market conditions on the condo market have been tight over the last three years, suggesting that the upward trend in condo prices in Toronto is unlikely to be interrupted in the near future.

May 2019

For further information about upcoming reports, please contact:

Kan Zhu
Leader, Data & Advisory Solutions
Teranet Inc.
Phone: 416-360-8863 x 2270
Email:
Michael Pertsis
Director, Mortgage Derivatives
National Bank Financial
Phone: 416.869.7124
Email: