Reports

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.  

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

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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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

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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