Canada: Housing prices ebb for the fifth consecutive month in February
March 13, 2019
House prices fell 0.4% on a seasonally-adjusted monthly basis in February, according to the Teranet-National Bank National Composite House Price Index (January: -0.0%). February’s print marked the fifth consecutive monthly decline in the index, driven by falls in 9 of the 11 markets surveyed. In annual terms, housing prices climbed 1.9% in February, down from January’s 2.2% increase. The softer housing market is likely tied to tighter mortgage lending guidelines and the five interest rate hikes since July 2017.
Prices in Victoria and Hamilton recorded the sharpest month-on-month drops in February, while prices in Toronto—which accounts for over a third of the 11-city composite index—also ticked down. In contrast, prices in Montreal continued to rise and, in February, Montreal surpassed Vancouver to become the second largest real estate market in Canada in terms of dollar value.
According to the British Columbia Real Estate Association, the value of total home sales in Greater Vancouver fell 40% year-on-year in February, coming in at CAD 1.4 billion. Meanwhile, the Quebec Professional Association of Real Estate Brokers reported CAD 1.6 billion in total sales for February, which was up 10% year-on-year. This reflects an affordability issue in Vancouver; whereas Montreal house prices are, on average, significantly lower relative to Vancouver, the number of transactions has been much greater there in recent months.
Author: Steven Burke, Economist