Canada: House prices perk up modestly in July as market stabilizes
House prices rose 0.8% on a monthly basis in July as the Teranet-National Bank National Composite House Price Index ticked higher, roughly in line with June’s 0.9% month-on-month increase. July’s rise appeared to confirm the recent stabilization of the housing market, which experienced volatility over much of the past year as eager homebuyers were increasingly put off by higher borrowing costs and new mortgage-lending rules.
In July, as in June, 10 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 0.8% month-on-month on seasonal pressures—rather than on any underlying trend. Montreal and Vancouver posted strong and weak gains, respectively.
In annual terms, the rise in house prices moderated in July, slowing to 1.8% from 2.9% a month earlier and representing the thirteenth consecutive monthly deceleration since last June’s record-breaking gains. Meanwhile, a separate dataset showed stronger home sales in July as a pullback in British Columbia was more than offset by the recent stabilization of the Toronto market. All told, housing fundamentals still appear solid despite the ongoing sluggishness in residential investment. That said, recent market-cooling interventions look to have run their course—although higher borrowing costs are expected to prevent a return to last year’s exuberance.