Reports

The fact that the national HPI began the fourth quarter with a dip is not troublesome. The fourth quarter is typically a lethargic period for the index. Indeed, last month’s decline was smaller than the average of the last ten Octobers. We do not think that October heralds a downward trend on the national home resale market. We rather welcome the first monthly rise of Vancouver’s index in 15 months. This is consistent with the strong revival of Vancouver home sales since August. On the other hand, October ended a run of six monthly rises in Toronto and Hamilton. Same story for the five-months runs of Montreal and Winnipeg. But there are no reasons to believe that October’s drops in these metropolitan areas are the start of a trend. Judging from the most recent data, the resale market remains balanced in Toronto and Winnipeg, and favorable to sellers in Montreal and Hamilton.

November 2019

The housing affordability composite index reversed back to its historical average in Q3 2019 as all observed markets improved in each of the last three quarters. The most significant factor to this development was the decline in mortgage rates. Indeed, the free-fall in financing costs over the last nine months was the most substantial since 2012 (-87 bps). The booming labour market also played a significant role in this development as income grew at a whopping 5.1% annualized over that period while home prices did not materially change at the national level. While our national housing affordability composite index is now in line with its historical average (43% of median income), it does not mean that the situation is back to normal in all metropolitan areas. Despite some welcome progress in the last three quarters (see chart on the left), the situation remains difficult in the two largest markets by housing market value. In Toronto, both condo and non-condo affordability improved substantially since Q4 2018 but remain above their respective historical averages. In Vancouver, the monthly mortgage payment as a percentage of income has reverted to its Q1 2016 level helped by a cumulative decline of home prices (down 8.1% since their peak). We note that affordability in the condo market in Greater Vancouver is back to its historical average while the non-condo segment remains costlier. Elsewhere in the country, the Montreal market for its part saw a smaller improvement as home prices registered the largest increase following Ottawa-Gatineau. Surging population growth in Canada’s largest metro areas, coupled with leveling mortgage rates should limit the scope for further improvement in home affordability.

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The fact that the national HPI has grown each month from May to September is not surprising. Almost all of the increase of a HPI during a year typically takes place over these months where the activity on the home resale market is the most intense. The underlying trend is better revealed when the HPI is seasonally adjusted. After that adjustment, the national HPI showed a downward trend from February to July, but the trend turned upward in August and September (left chart). That being said, this situation was not homogeneous among all the component regions. Seasonally adjusted or not, home prices continue to decline in Vancouver. But home sales in Vancouver have recovered strongly since their March trough (right chart). Over the period, conditions on the home resale market turned from “favorable to buyers” to “balanced”. This suggests that home price deflation should fade over the next few months in Vancouver.

October 2019

Every month we publish data around the activity of the national composite index, and some highlights from Canada’s major housing markets. Our data goes a level deeper, and can highlight the house price activity of neighbourhoods down to the postal code. The new monthly Neighbourhood Spotlight features will focus on this data and highlight Canadian neighbourhoods with particularly high or low index values.

It’s no surprise that one of Toronto’s neighbourhoods is experiencing high index values, as home prices in the city have continued to increase year-over-year. The index covering Downtown Toronto West recently printed an all time high of 328.51. In fact, this was the highest index value in all of Canada in the second quarter of 2019. This neighbourhood includes Dovercourt Village, Little Portugal, Brockton and Roncesvalles, or the FSAs of M6G, M6H, M6J, M6K AND M6R. This neighbourhood has seen an index increase of 8.3% in the past year, 50.9% in the past three years, and 84.6% in the past five years.

In a recent study about the average prices of condos and homes in Toronto neighbourhoods, Zoocasa reported that Roncesvalles, also known as Toronto’s Little Poland, has been a good neighbourhood to invest in as condo prices here have increased 71% over the past five years. The average price of a condo in Roncesvalles is now around $650,000 which still makes it more affordable compared to other Toronto neighbourhoods. Roncesvalles is home to lots of restaurants, with close access to the Entertainment District and Financial District downtown, which could explain why the neighbourhood has become more popular and experienced a significant increase in the price of condos.

To learn more about how you can gain greater insights through our neighhourhood sub-indices contact Michael Pertsis at michael.pertsis@bnc.ca or Kan Zhu kan.zhu@teranet.ca today.

The national HPI has grown at a below-inflation rate of 0.6% over the last 12 months.
However, the weakness is not regionally broad-based. The national HPI has been
depressed by 12 consecutive months without a rise in Vancouver’s index, which
dropped a cumulative 6.6%. Other Western metropolitan areas (Victoria, Calgary,
Edmonton, and Winnipeg) also contributed to slow the national HPI. At the opposite,
annual growth has been decent in most of the regions located in the central and
eastern part of the country (left chart). That being said, home sales in August were up
55% from March in Vancouver, where market conditions went from “favorable to
buyers” to “balanced” (right chart). Over that period, home sales rose 19% in Calgary
and 12% in Edmonton. These improvements, if sustained, will sooner or later help limit
home-price deflation in this region.

September 2019

Each month we share data on 11 indices that form the Composite 11 Index. The data from Victoria, Vancouver, Calgary, Edmonton, Winnipeg, Hamilton, Toronto, Ottawa-Gatineau, Montreal, Quebec and Halifax are all weighted to create this combined national index. The Composite 11 is updated on our website and shared with subscribers via newsletter at 8:30 a.m. each month on the release date. This public data allows you to dive into historical house price activity to see what’s happened month-over-month in Canada’s major housing markets.

In addition to this public data, we also offer a subscription solution that delivers the data from each of the 11 indices from the Composite 11 as well as the monthly and historical files covering 14 additional Canadian CMAs in British Columbia, Alberta, Manitoba, Ontario, Quebec and Nova Scotia. The most recent index values from these CMAs are available publically on our website, and can be used to compare the monthly changes between any six of the 25 CMAs. The subscription solution also includes the quarterly Teranet-National Bank House Price Index Sub-Indices, which reports on price changes in specific regions, markets and neighbourhoods across Canada by property type.  

To sign-up for our monthly newsletter and receive the Composite 11 Index data when economists do, click here. If you’d like to receive more information about the subscriptions services, please contact Michael Pertsis at michael.pertsis@bnc.ca or Kan Zhu at kan.zhu@terant.ca.