Canada: House prices cool in August
September 12, 2018
House prices rose 0.2% on a monthly basis in August as the Teranet-National Bank National Composite House Price Index ticked higher, down from July’s 0.8% month-on-month increase. Notwithstanding some seasonality, August’s rise appeared to confirm the recent stabilization of the housing market, which experienced volatility over much of the past year as homebuyers were increasingly put off by higher borrowing costs and new mortgage-lending rules.
In August, 8 of the 11 cities included in the composite index posted gains from a month earlier. In Toronto, which accounts for more than a third of the 11-city composite index, prices climbed 0.3% month-on-month—but were virtually flat after seasonal adjustment. Montreal and Vancouver posted strong gains and moderate losses, respectively.
In annual terms, the rise in house prices moderated in August, slowing to 1.4% from 1.8% a month earlier and representing the fourteenth consecutive monthly deceleration since last June’s record-breaking gains. Meanwhile, a separate dataset showed home sales rising for a fourth straight month in August. Although housing fundamentals appears to have steadied in recent months, FocusEconomics analysts are split over the direction of the housing market in the short-term. That said, most agree that higher borrowing costs should—at least—avert a return to last year’s exuberance.
Author: Christopher Thomas, Economist