Canada: National house prices hit fresh record high in April as Toronto market surges
May 12, 2017
The Teranet-National Bank National Composite House Price Index recorded a monthly increase of 1.2% in April, which came in above March’s 0.9% and was the fastest acceleration in eight months. The index continued its streak of record-breaking highs—April’s reading of 206.4 was the highest on record.
With regard to regional developments, the Toronto housing market, which accounts for more than a third of the 11-city composite index, recorded a 2.6% month-on-month increase and was followed by neighboring Hamilton (+2.1% mom) in gains. Meanwhile, the Vancouver market, which accounts for a fifth of the index, posted a 0.1% decrease over the previous month as prices fell further below their September 2016 high. April’s index reading saw a more broad-based increase of house prices across the country than in other recent months, with only Québec joining Vancouver in seeing prices decline from a month earlier. Both coasts also fared well in the month, with Halifax and Victoria each recording strong gains. The remaining markets experienced modest gains, while Ottawa-Gatineau saw stable prices from a month earlier.
On an annual basis, the acceleration in national housing prices was broadly stable in April at 13.4%, slowing only marginally from the over ten-year high of 13.5% recorded in March. While some of April’s gains were felt by Canadians outside of Ontario’s Golden Horseshoe region, the report did little to quell fears of a worsening Toronto housing market bubble—where prices have climbed 26.3% from a year earlier. In April, the Ontario government followed British Columbia in announcing a foreign homebuyer tax to cool the Toronto housing market, though its effectiveness remains to be seen given that foreign investment in Ontario’s capital is considered less of a factor than in Vancouver.
Author: Christopher Thomas, Economist