Reports

Teranet-National Bank Composite HPI registered a record monthly gain for the month of November, as it did in October. This performance coincides with the persistence of historically high home sales in many regions in Canada in conjunction with a low supply. Since July, the seasonally adjusted unsmoothed Composite HPI surged 6.3%. That being said, the upward trend in Canadian home prices does not apply
everywhere to all categories of dwellings. In Toronto, the rise in sales was mostly concentrated outside downtown in ground-level dwellings, at the expense of apartments. As for Greater Montreal, the Quebec Professional Association of Real Estate Boards reported a very significant increase in active listings for condominiums on the Island of Montreal, a sharp contrast with the other areas of that region. In Greater Vancouver and Victoria too, price increases of ground-level dwellings are outpacing that of apartments. The outlook for that segment of the market is most impacted by immigration flows and the still-elevated unemployment rate among young workers, that is, potential first-time home buyers.

November 2020

The strong performance of the Teranet-National Bank Composite HPI over the last three months coincides with very strong levels of home sales nationwide. In October, it became clear that the recent trend in sales more than made up for the spring lethargy caused by Covid-19. Furthermore, sales were at historically high levels lately in most regions in Canada. This has translated into an unprecedented diffusion of monthly home price gains over the last three months in the 31 CMAs for which a Teranet-National Bank HPI is produced. That being said, the upward trend in home prices does not apply everywhere to all categories of dwellings. In Toronto, the rise in sales was mostly concentrated outside downtown in dwellings other than apartments (mostly detached, semi-detached and townhouses). On the opposite side, the recent trend in apartment sales remained weak. As for the Greater Montreal, Quebec Professional Association of Real Estate Boards reported a very significant increase in active listings for condominiums on the Island of Montreal, a sharp contrast with the other areas of that region. In fact, for both Toronto and Montreal, the Teranet-National Bank unsmoothed HPI for apartments has clearly decelerated over the last two months compared to other dwellings.

November 2020

The strong performance of the Teranet-National Bank HPI reflects two factors: the intense activity on the home resale market due to the catch-up of sales that would have taken place last spring were it not for Covid-19 and tight market conditions in Quebec, Ontario and the Maritimes Provinces (See our Housing Market Monitor). That being said, a catch-up of sales does not necessary apply to all types of dwellings. This is obvious in Toronto, where the rise in sales was mostly concentrated in dwellings other than apartments (mostly detached, semi-detached and townhouses) outside downtown. At the opposite, the recent trend in apartment sales remained weak. As for Montreal, Quebec Professional Association of Real Estate Boards reported a very significant increase in active listings for condominiums on the Island of Montreal, in contrast with the other geographic areas particularly for single family homes. In both cities, a deceleration of downtown apartment prices may be underway. Indeed, it might have started to appear in the Teranet-National Bank HPI for both metropolitan areas, when we look at unsmoothed (raw) indices for apartments and other types of dwellings. In September, the HPI for apartments departed from the upward trend of the HPI for other dwellings for both CMAs. The situation deserves attention over the coming months.

October 2020

The Composite index of resale home prices continued to rise in August. Indeed, 10 of the 11 markets were showing an increase in the month with the exception being a flat print in Calgary. The increases in August were consistent with conditions present in the home resale market. Looking at the active-listings-to-sales ratio as published by CREA, half of the provinces were solidly a “sellers’ market” with B.C. and Manitoba very close to showing that same status. This was the result of a new record level of home sales at the national level. The underlying data for the Composite House Price Index was consistent with the sharp rebound in activity. Indeed, the Teranet-National Bank HPI uses a sales-pair methodology to track home prices and the latter were down a mere 1.3% from a year earlier, in sharp contrast after three months of 12-month declines exceeding 20%. It must be said that there was a lot of catching up to be done given the pent-up demand from months of confinement. What’s more, mortgage interest rates have reached a record low and are an additional incentive for those looking for a property. When we seasonally adjust the unsmoothed composite index, August would be up a significant 1.7% from July, the highest monthly change in the last 40 months. Nonetheless, the housing market is facing several challenges in the months ahead. The tapering of income assistance programs in a still-depressed labour market combined with weaker immigration flows should translate into headwinds for housing demand.

September 2020

Housing affordability in Canada`s large urban centres improved in the second quarter of 2020 after having deteriorated in the two prior quarters. Higher incomes helped in Q2 but the largest portion of the improvement came in the form of lower interest rates. Indeed, the latter declined 19 basis points in the quarter, reflecting the easing from the central bank. Combined, income and mortgage rates were more than enough to offset the increase in home prices. Still, the decline in interest rates on a quarterly average basis does not completely reflect the change in 5-year mortgage rates since the beginning of the COVID-19 pandemic. The February to June decline in mortgage interest rates was a much more significant 41 basis points. Looking ahead, the preliminary data for rates shows additional improvements in the third quarter of the year (cumulatively they are down over 70 bps). While we expect this to help affordability, home prices should remain resilient based on the latest resale market data showing record sales volumes. Homebuyers have rushed back to the market after having delayed purchases and are now being offered record-low interest rates. Once pent-up demand is exhausted, the Canadian housing market will still have to face high levels of unemployment and reduced household formation due to lower immigration.

Read research report

As the Canadian real estate market continues to evolve and expand, we aim to provide you with data that gives you a better picture of the national market. In order to do so, we are pleased to announce as of this month’s release, we have expanded our data set for the 26 CMAs to now include data from 6 additional CMAs: Lethbridge (AB), Bellville (ON), Trois-Rivières (QC), Sherbrooke (QC), Saint John (NB) and Moncton (NB). Make sure to check out this new and improved data offering and compare the monthly changes between any six of the new and current CMAs.