Canada: Housing prices increase robustly in February
House prices increased 0.4% on a month-on-month non-seasonally-adjusted basis in February, according to the Teranet-National Bank Composite House Price Index, stronger than January’s 0.1% uptick. Year-on-year, house prices were up 2.9%, which was higher than January’s 2.1% rise, and marked the strongest rise since November 2018.
In February, prices in 7 of the 11 markets surveyed rose over the month prior. Prices in Vancouver increased in February, which represents the fifth consecutive month without a fall—following its 15-month run of declines. Prices in Toronto—which accounts for over one-third of the 11-city composite index—rose robustly, while prices in Montreal and Halifax also increased at a healthy pace in February. In contrast, prices in Quebec City and Calgary both decreased in February.
In February, the home resale market showed signs of strength particularly in Vancouver; however, Covid-19 containment measures will certainly weigh on the housing market in March and likely for the majority of the second quarter. This will certainly drag on housing prices, in addition to, affordability issues in key markets and flagging consumer confidence. Nevertheless, a looser monetary stance, government measures to support first-time home buyers and strong population growth should prop up prices—in the aftermath of the virus.