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

Post Category: Monthly Reports
April 12, 2019
The Composite Index down for a sixth month in a row in March

In March the Teranet–National Bank National Composite House Price IndexTM was down 0.3% from the previous month.[1] Apart from the recession year 2009, it was the first March decline in the 20 years of index history. It was also the sixth consecutive monthly decline, for a cumulative drop of 1.7%. Indexes were down on the […]

Post Category: News and Press Releases
April 12, 2019
The national HPI drops for a sixth month in a row

In March, the downward trend in home prices continued with the Composite Teranet-National Bank HPI slipping for a sixth month in a row, a first in six years. Moreover, in 20 years of history, this is the first time that the Composite HPI drops in a month of March outside a recession. A few months ago, the home price weakness was mainly noticeable in the westernmost metropolitan areas. Judging from the six-month change in the index, it now extends to nine of the 11 regions comprising the Composite index, the exceptions being Montreal and Halifax. If we also consider 14 other metropolitan regions for which a Teranet-National Bank HPI is computed (although not included in the Composite), we have a price increase in only six of the 25 metropolitan regions considered. This is one of the lowest diffusion of 6-month price gains in March over the history of the index. Home prices are adjusting to the recent rise in interest rates and stricter mortgage qualification rules. But price weakness does not mean collapse. In Toronto, Canada’s largest real estate market, apartment prices have been up for 17 consecutive months, while prices of other types of dwellings declined only 1.4% over the last 6 months. In Vancouver, the most expensive market, employment growing 2.9% in Q1 on a y/y basis should limit further home price declines.

April 2019

Post Category: News and Press Releases
March 13, 2019
Price weakness spreads to almost all regions

In February, the downward trend in home prices continued with the Composite Teranet-National Bank HPI slipping for a fifth month in a row (left chart). Moreover, the weakness extended to most regions. In the 11 metropolitan areas comprised in the Composite Index, only one (Montreal) experienced an increase of the index over the last six months. Among the 14 other metropolitan areas for which we have a HPI, only London and Windsor did so. This was the lowest diffusion of six-month gains in ten years for a month of February (right chart). Home prices are adjusting to the recent rise in interest rates and stricter mortgage qualification rules. But price weakness does not mean collapse. In Toronto, Canada’s most important real estate market, apartment prices have been up for 16 consecutive months, while prices of other types of dwellings declined only 1.2% over the last 6 months. In Vancouver, where employment was up 3.1% on a y/y basis in February, seasonally adjusted home sales stabilized in the beginning of the year, limiting the potential of further home price declines.

March 2019

 

Post Category: Monthly Reports
March 13, 2019
Largest retreat for a February outside of recession

In February the Teranet–National Bank National Composite House Price IndexTM was down 0.4% from the previous month.[1] Except for the recession year of 2009, it was the largest February decline in 19 years of index history. Indexes lost ground in nine of the 11 metropolitan markets of the composite index: Victoria (−2.0%), Hamilton (−1.4%), Quebec […]

Post Category: News and Press Releases
February 13, 2019
Weakness intensifies in Vancouver, Calgary and Edmonton

In January, the downward trend in home prices intensified in Western Canada’s three
largest metropolitan areas. The indexes for Vancouver, Calgary and Edmonton extended
what are now the longest runs of months without an increase among the 11 metropolitan
areas covered by the national index. It was a seventh month without an increase in
Calgary, a sixth one in Vancouver and a fifth one in Edmonton. Home prices have been
trending down in three of the past four years in Calgary and Edmonton while Vancouver
shows no growth for the first time in six years (left chart). In City of Calgary, the listingsto-
sales ratio was the highest for a month of January since 2014 (right chart) – the year
when the oil price collapse occurred. Both Calgary and Edmonton are facing an outsized
number of vacant new dwellings and continued price weakness. In Vancouver, where
home sales have weakened in recent months, things appear to be stabilizing. After
seasonal adjustment, Vancouver home sales indeed stabilized when compared to
December. Solid labour markets in Greater Vancouver, where a near-record 72K jobs
were added in the last six months, argue for a more stable listings-to-sales ratio and
limited price deflation.

February 2019

Post Category: Monthly Reports
February 13, 2019
Weakness concentrated in the West

In January the Teranet–National Bank National Composite House Price IndexTM was down 0.1% from the previous month.[1] It was the fifth consecutive month without a rise, the longest such run since March 2013, and was notable for marked retreats in the three largest markets of Western Canada: Edmonton (−0.8%), Calgary (−0.5%) and Vancouver (−0.3%). The […]

Post Category: Research
February 04, 2019
Interest rates raise the bar for home ownership in Q4 2018

In Q4, affordability worsened for a 14th consecutive quarter as measured by the urban
composite index. All but two markets experienced a deterioration stemming from a 20-
basis points increase for residential mortgage rates, hitting harder the priciest markets in
the country (see table on page 12 for more details). Financing costs were up for a sixth
consecutive quarter which marked the longest streak of rises since the period of ’99-‘00.
In Vancouver, home prices are decreasing but it did not prevent affordability to
deteriorate further amid higher interest rates and declining median annual income. In this
city, our measure for the non-condo segment have crossed the psychological threshold
of 100% as it would now require 101.5% of pre-tax median household income to pay for a
representative home. In other words, this segment is even more out of reach for a median
income family. As it is the case in Vancouver, both segments at the national level
experienced a significant deterioration over the past 3 years but the magnitude of the
worsening has been less pronounced for condos (left chart) which could explain why
prices are still running at a solid pace in 2018 (+6.2% y/y vs. 1.2% for non-condos). That
being said, a moderation in the condo segment should not be ruled out in 2019 as stiff
competition is now coming from the rental apartment option.

Read research report..

Post Category: News and Press Releases
January 14, 2019
Widespread declines in home prices over Q4 2018

Home prices weakened in the second half of 2018 in most of the metropolitan areas
constituents of the Teranet-National Bank Composite HPI. The Calgary index did not rise
for a sixth month in a row in December. It was a fifth month in a row for Vancouver, and
a fourth one for Edmonton. Weakness became apparent in Q4 for six other metropolitan
areas, when only Montreal and Ottawa-Gatineau experienced home price growth (left
chart). This is the worst 3-month diffusion for December in five years. This conclusion
still holds If we also include in the sample 14 other Canadian metropolitan areas for
which a Teranet-National Bank HPI is available (although not integrated in the national
composite index) – right chart. Higher mortgage rates and tougher qualification rules are
causing the cooling in most major home resale markets in Canada. The recent increase
in vacant new dwellings may also add to downward price pressure in some markets. At
this juncture, we continue to expect a soft landing of the Canadian home resale market.

.January 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: