Canada: House prices fall for fifth straight month in October; housing starts decline
November 18, 2022
According to the Teranet-National Bank Composite House Price Index, house prices decreased 0.8% month on month in October, following September’s 3.1% fall. House prices increased 4.9% annually in October, down from September’s 6.0% increase. Meanwhile, housing starts fell 11% in October from September, boding poorly for residential investment in Q4. That said, at 267,000 units in annualized terms, housing starts were still elevated by historical standards.
The latest data is a reflection of the impact that higher interest rates are having on the housing market. Looking forward, both housing starts and prices are likely to trend down while the Bank of Canada’s tightening cycle continues.
On the outlook, TD Economics’ Rishi Sondhi said : “Our current forecast sees Canadian average home prices retracing about half of the gains made during the pandemic, although how the supply picture unfolds represents a key risk to this forecast. With homeowners feeling the pinch of higher monthly payments due to rising interest rates, some may be forced into listing their properties (although so far, the level of new supply hitting the market each month remains subdued). If a sufficiently large number of these homeowners end up listing their homes, it could downwardly pressure prices by more than we anticipate.”