Canada: House prices edge higher in May as Toronto posts gains
June 13, 2018
House prices rose 1.0% on a monthly basis in May as the Teranet-National Bank National Composite House Price Index ticked higher, accelerating from April’s 0.2% month-on-month increase. May’s rise appeared to confirm a nascent stabilization in house prices, which fell earlier this year as homebuyers were put off by higher borrowing costs and new mortgage-lending rules.
In May, all 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 on tight conditions in the condo resale market—and pointed to a steadying in Canada’s largest property market. Vancouver and Montreal, meanwhile, also posted solid gains in May.
In annual terms, the rise in house prices moderated in May, slowing to 4.5% from 5.6% a month earlier and representing the eleventh consecutive monthly deceleration since last June’s record-breaking gains. Meanwhile, a separate dataset showed weaker house sales in May as turnover hit a five-year low. All told, housing fundamentals still appear solid despite the ongoing sluggishness in residential investment—although May’s gains suggest that recent market-cooling interventions, especially in Ontario and British Columbia, have run their course.
Author: Christopher Thomas, Economist