Canada: House prices unchanged in April
House prices were virtually stable on a seasonally-adjusted monthly basis in April, according to the Teranet-National Bank Composite House Price Index (March: -0.3%). April’s print registered the eighth consecutive month without an increase in the index and was driven by drops in 6 of the 11 markets surveyed. In annual terms, housing prices increased 1.2%, down from March’s 1.5% rise.
Prices in Winnipeg, Halifax and Vancouver recorded the sharpest month-on-month drops in April, while prices in Toronto—which accounts for over one-third of the 11-city composite index—posted a modest increase. Moreover, prices in Montreal and Quebec City fell in April, contrasting March’s increases.
The Central Bank has continually monitored adjustments in Canada’s housing market when conducting monetary policy.
On 6 May, in a press release addressing Canada’s mortgage market, Bank of Canada Governor Stephen Poloz, noted:
“Some previously frothy markets are still adjusting to a significant shift in price expectations, while other markets appear to be operating in a manner consistent with market fundamentals. As markets stabilize in Toronto and Vancouver, the Canadian housing sector should return to growth overall later this year.”
Similarly, Brendan LaCerda, senior economist at Moody’s Analytics, added:
“Prices in Ontario and British Columbia far exceed their fundamentals, and certain metro’s may be 30% to 40% overvalued. Being overvalued does not necessarily imply prices will fall, but the key fundamentals of income and population growth need time to catch up. Prices are likely to remain flat in the short run. Over the medium-run horizon, prices will start to pick back up, but at a far slower pace than experienced in recent years.”