Canada: House prices stable in September
October 12, 2018
House prices were flat on a monthly basis in September as the Teranet-National Bank National Composite House Price Index matched the previous month’s reading, easing from August’s 0.2% month-on-month increase. September’s stable reading appeared to signal the further stabilization of the housing market, which has cooled considerably since last year as increased borrowing costs and new mortgage-lending rules have deterred homebuyers.
In September, 5 of the 11 cities included in the composite index posted gains from a month earlier. In Toronto, accounting for more than a third of the 11-city composite index, prices ticked down 0.1% month-on-month. Meanwhile, prices in Vancouver were virtually unchanged from the previous month although, accounting for seasonality, would have recorded a fourth consecutive monthly pullback.
In annual terms, housing prices increased 2.1% in September, accelerating from 1.4% in August and ending a 14-month deceleration. Moreover, FocusEconomics analysts have grown less bearish on the housing market in recent months. That said, new lending guidelines introduced at the start of 2018 have made it increasingly difficult to qualify for mortgages and, along with higher interest rates, are expected to depress demand over the short-term.
Author: Steven Burke, Economist