Canada: House prices smash all records in June as Ontario and B.C. markets surge
July 12, 2017
In June, the Teranet-National Bank National Composite House Price Index recorded a monthly increase of 2.6%, which was the fastest monthly acceleration on record. June’s print soared above May’s still-impressive 2.2% rise as the index continued its streak of record-breaking highs for a seventeenth consecutive month—June’s reading of 216.5 was the highest on record.
June’s increase in housing prices was nearly broad-based, with prices climbing from coast to coast. With regard to regional developments, the Toronto housing market—which accounts for more than a third of the 11-city composite index—did much of the heavy lifting in May, recording a sizeable 3.7% month-on-month increase. Toronto tied with Québec in terms of monthly gains and was overshadowed only by neighboring Hamilton (+4.1% month-on-month). Meanwhile, the Vancouver market, which accounts for a fifth of the index, posted a 2.5% increase over the previous month as prices edged further away from their September 2016 high.
On an annual basis, national housing prices accelerated at a faster rate in June, climbing to 14.2% from 13.9% a month earlier—reaching an all-time high. Hefty gains in Toronto and Hamilton further fueled fears of a worsening housing market bubble in Ontario. Home prices in the Toronto market have so far climbed 29.3% from a year earlier and have priced many homebuyers out of the city and into the surrounding areas.
Not included in the 11-city composite index are the seven satellite cities surrounding Toronto—the region known as the Golden Horseshoe—which have all recorded double-digit gains in the past year, largely justifying the Ontario government’s recent moves to tax foreign homebuyers in an effort to cool the wider provincial market. That said, recent gains in Vancouver suggest that provincial legislation designed to curb speculation has only temporarily delayed foreign homebuyers in British Columbia and the possibility that Ontario’s measures will suffer from similar limitations has cast doubt on the likelihood of a controlled cooldown in Canada’s largest property market.
Author: Christopher Thomas, Economist