Reports

The Teranet-National Bank HPI remained essentially stable between September and October after a small increase of 0.1% the previous month. Does this mean that housing prices have entered a dry spell in Canada? Not so fast. It is quite typical to observe a lull in September and October after the summer strength. In fact, the evolution of the last two months was essentially in line with the average of the last ten years for these months. This is still a significant moderation relative to the previous seven months, which were all substantially above their averages. For this reason, the 12-month price growth moderated but remains high at 15.8% for the composite 11. Over this period, no less than 80% of the 32 agglomerations posted increases of more than 10%, which testifies of the generalized nature of the increases in the country. Despite the deterioration in affordability over the past year and our expectation of higher mortgage interest rates going forward, we do not foresee a downward trend in prices for the next few months. This is because although the level of sales has moderated recently, it remains historically high and the inventory of properties for sale continues to be extremely low.

November 2021

It has been a few months now that sales in the Canadian residential market have been decreasing. This slowdown is beginning to have an impact on price growth, with the Teranet-National Bank HPI remaining relatively stable between August and September with a slight increase of 0.1%, the smallest monthly increase since January 2020. For its part, the 12-month price growth came down from its record high observed in August and stood at 17.3% in September. This is the first time in fourteen months that annual growth has been lower than that observed in the previous month. Although the annual price increase in September was lower than what we saw in the previous two months, it was still the third highest 12-month growth in history. In addition, prices remain up 10% or more in 87% of the 32 urban areas surveyed, even though some extremely hot markets are beginning to cool. All in all, barring a more significant rise in mortgage rates, we do not foresee a downward trend in prices in the coming months. It should be noted that the level of sales remains historically high and that the inventory of properties for sale continues to be extremely low.

October 2021

In August, the Teranet-National Bank HPI saw record 12-month growth of 18.4%. This past year has been characterized by widespread price increases in the regions covered by the index. Indeed, prices were up 10% or more in 87% of the 32 urban markets surveyed. In addition, price growth was up 30% or more in 45% of markets. However, this dizzying growth in major urban centers hides a very different dynamic when analyzing the month-over-month variations. In fact, using the unsmoothed composite HPI adjusted for seasonal effects, there have now been five consecutive months in which the monthly increase in prices has been lower than in the previous month. From July to August, prices even remained essentially unchanged (+0.1%). This stagnation coincides with a decrease in activity in the resale market, which is potentially being held back by affordability issues after the staggering price increases. Indeed, home sales have been declining month-to-month for five months now. However, we do not see prices decreasing in the short term as the level of sales remains high on a historical basis and the inventory of properties for sale remains very low.

September 2021

In July, the Teranet-National Bank HPI was up 2.0% compared to the previous month. While this is still very robust growth, it is now the second consecutive month that the monthly price increase is lower than the previous month. This slowdown coincides with a decrease in activity in the resale market. In fact, home sales have been decreasing for four months in a row now. With this moderation in sales seemingly well underway, price growth may continue to slow in the months ahead. However, the real estate market continues to be strong on a historical basis, so we do not see prices decreasing in the near term, even though the gains over the past year are staggering. Indeed, the composite index continues to break records, recording 17.8% year-over-year growth in July. The recent records are characterized by widespread price increases across the regions covered by the index. Indeed, prices were up 10% or more from the same period last year in 87% of the 32 urban markets surveyed. In addition, price growth was up 30% or more in an unprecedented 48% of markets.

August 2021

In June the Teranet-National Bank HPI was up 16.0% from a year earlier, the largest 12-month gain on record. The record is the more impressive for beating the 14.2% rise of June 2017, which preceded the coming into effect of macroprudential measures to restrain home prices. At that time the price rises were concentrated in the markets of Vancouver and the Golden Horseshoe region including Toronto and Hamilton. This month’s new record is based on countrywide rises across the regions covered by the index. Prices were up 10% or more in an unprecedented 90% of the 32 urban markets for which an index exists and 30% or more in an equally unprecedented 42% of these markets. The June monthly gain of 2.7% in the national composite index was its 20th consecutive monthly rise and the second largest since the beginning of the index in 1999. However, it was the first deceleration from the month before (May rise 2.8%) since January. This cooling coincides with a slowing of growth in existing home sales – their number declined in June for a third straight month. The moderation of the pace of sales could mean a slowing of price rises in the coming months. However, since the market remains vigorous by historical standards, we do not anticipate a decline of prices in the near term.

July 2021