Canada Housing April 2020

Canada

Canada: Housing prices increase at the quickest pace since July 2017 in April

May 27, 2020

According to the Teranet-National Bank Composite House Price Index, house price growth accelerated to 1.3% on a month-on-month non-seasonally-adjusted basis in April, stronger than March’s 0.6% uptick, and consequently the fastest pace in nearly three years. In annual terms, house prices were up 5.3% (March: +3.8% year-on-year), marking the strongest rise in two years.

In April, prices in all 11 markets surveyed increased over the month prior. Prices in Montreal and Ottawa increased robustly in April, while prices in Toronto—which accounts for over one-third of the 11-city composite index—grew a firm 2.0% month-on-month.

April’s print was likely the result of a lag in transaction data in land registries, as lockdown measures in April weighed heavily on activity in the real estate market. Home sales in April plunged a whopping 56.8% month-on-month.

Commenting on April’s home sales activity, Brian DePratto, a senior economist at TD economics, noted:

“Not only did buyers retreat to the sidelines in record numbers, so too did sellers. This meant that markets remained in balanced territory overall. The sales-to-listings ratio clocked in at 62.4 in April – in normal times, this "seller's territory" reading would be consistent with positive price growth.”

Going forward, housing prices will likely be downbeat for the majority of this year as lower employment levels, weak consumer confidence and heightened economic uncertainty weighs on purchasing decisions. Moreover, despite ultra-low interest rates, mortgage rates are on the rise due to dwindling global economic sentiment, which has weighed heavily on liquidity, and consequently raising the cost of funding. That being said, the Bank of Canada has purchased billions worth of mortgage bonds since the pandemic started in March, which should help to shore up liquidity in the real estate market. Furthermore, government support for first-time home buyers should support up prices once economic activity stablizes.


Author:, Economist

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Canada Housing Prices April 20 20

Note: Monthly and annual variation in % of the Teranet-National Bank House Price Index.
Source: .


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