Canada: House prices essentially flat in March as Toronto market appears to stabilize
House prices were essentially unchanged in March as the Teranet-National Bank National Composite House Price Index came in flat from a month earlier, following February’s 0.1% month-on-month decrease. New mortgage lending rules and rising borrowing costs following recent tightening by the Bank of Canada have led to a cool-off in home buying and a broad-based slowdown across markets.
In March, 6 of the 11 cities in the composite experienced a drop in prices in monthly terms, whereas only 4 cities recorded higher prices, including Vancouver. In Toronto, which accounts for more than a third of the 11-city composite index, prices were flat from a month earlier, suggesting Canada’s largest property market could be stabilizing after posting a sharp decline at the outset of the year as the new rules took effect.
In annual terms, the rise in house prices moderated in March, decelerating to 6.6% from 7.5% in February and representing the ninth consecutive monthly deceleration since last June’s record expansion. Weaker activity in the housing market, also on display in March’s slower house-sales data, is expected to weigh on residential investment in the quarter and drag on economic growth this year. Nevertheless, housing fundamentals still appear solid, and wage growth has continued to outpace higher borrowing costs.