Canada: House price growth remains elevated in May, but slowdown likely ahead
June 17, 2022
According to the Teranet-National Bank Composite House Price Index, house prices increased 2.3% month-on-month in May. The print followed April’s 2.7% rise, and was driven by broad-based price gains across the country. Meanwhile, house prices increased 18.3% annually in May, down from April’s 18.8% increase.
The strong housing market over the last year has been driven on one hand by strong demand, thanks to population growth, a healthy labor market and changes to housing preferences due to the pandemic, and on the other by restricted housing supply. However, monetary tightening by the Central Bank and reduced affordability should lead the housing market to cool later this year. Indeed, this slowdown is already evident in statistics gathered from different sources: In May, home sales fell 8.6% on a month-over-month basis according to the Canadian Real Estate Association (CREA). Moreover, the CREA’s house price index showed a decline in May.