November Teranet National House Price Index

Home price growth paused in October

In October, the Teranet–National Bank National Composite House Price IndexTM remained unchanged from the previous month. This makes five consecutive months where the monthly price increase is lower than the previous month. The October index was led by seven of the 11 constituent markets: Hamilton (0.9%), Victoria (0.7%), Halifax (0.5%), Edmonton (0.3%), Calgary (0.2%), Quebec City (0.2%) and Toronto (0.1%). Prices remained stable in Winnipeg, while decreases were observed in Montreal (-0.2%), Vancouver (-0.4%) and Ottawa-Gatineau (-1.0%). This was the second time in eight months that gains were not observed in all regions included in the composite index.

The slowdown in price growth can be linked to the slowdown in housing sales reported in recent months by the Canadian Real Estate Association. In fact, when analyzing the 12-month growth in the number of sale pairs[1]  used to calculate the composite index, this is the first time in 14 months that they have not increased. However, prices could start to rise again in the coming months given the very limited supply of properties for sale.

The October composite index was up 15.8% from a year earlier. After reaching record annual growth in August, this is the second consecutive month in which growth is lower than the previous month. The 12-month rise was led by six markets: Halifax (30.3%), Hamilton (26.5%), Ottawa-Gatineau (20.9%), Victoria (18.9%), Montreal (17.1%) and Toronto (16.3%). Growth was lower than the average in Vancouver (14.5%), Winnipeg (11.3%), Calgary (8.5%), Quebec City (8.4%) and Edmonton (5.5%).
Besides the Toronto and Hamilton indexes included in the countrywide composite, indexes exist for seven smaller urban areas of the Golden Horseshoe – Barrie, Guelph, Brantford, Kitchener, St. Catharines, Oshawa and Peterborough. In October, all of these regions except Peterborough were up from the previous month, with the year-over-year variation ranging from 26.0% in Kitchener to 32.0% in Barrie.
Indexes not included in the composite index also exist for 13 markets outside the Golden Horseshoe. Seven of them are in provinces other than Ontario: Abbotsford-Mission and Kelowna, B.C.; Lethbridge, Alberta; Trois-Rivières and Sherbrooke, Quebec; and Moncton and Saint John, New Brunswick. On a monthly basis, the index decreased in four of these seven regions in October. The Moncton, Sherbrooke and Kelowna regions still stood out from the pack with growth of 1.9%, 1.6% and 1.3% respectively compared to the previous month. All seven were up from a year earlier, their gains ranging from 5.2% for Lethbridge to 31.5% for Moncton.
The remaining six regions are located in Ontario outside the Golden Horseshoe: London, Kingston, Belleville, Windsor, Thunder Bay and Sudbury. On a monthly basis, the indexes advanced in all but Kingston. The 12-month gains ranged from 14.3% for Thunder Bay to 39.8 % for Belleville.
[1] The Teranet–National Bank House Price Index is based on the repeat-sales method, i.e. on the change in price between the two most recent sales of properties that have been sold at least twice.

Report By:
Daren King
Economics and Strategy Group
National Bank of Canada
The Teranet-National Bank House Price Index™ thanks the author for his special collaboration on this report.