Canada: Growth in housing prices slow in August, activity in the market remains tepid
House prices increased 0.4% on a monthly basis in August, according to the Teranet-National Bank Composite House Price Index, down from July’s 0.7% gain. In August, prices in 8 of the 11 markets surveyed rose over the month prior. However, when adjusting for seasonal factors the house price index actually increased slightly in August, contrasting the previous three months. Year-on-year, house prices were up 0.6%, higher than July’s 0.4% uptick, but still subdued compared to historical standards.
In month-on-month non-seasonally-adjusted terms, prices in Halifax, Ottawa and Montreal registered the fastest increases in August, while prices in Toronto—which accounts for over one-third of the 11-city composite index—also rose. In contrast, prices in Vancouver continued to fall.
Going forward, high household debt and affordability issues—in key housing markets—will likely continue to weigh on house prices compared to historical standards. However, lower borrowing costs and solid existing home sales growth in recent months should continue to keep housing prices rising modestly for the remainder of the year.