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Canada: Teranet−National Bank House Price Index up 1.3% in September

Wed, Nov 25 2009, 14:58 GMT
by Economic and Strategy Team

National Bank of Canada

Composite index up 1.3% in September

m/m growth
Latest: +1.3% previous: +2.0% prior: +1.6%

y/y growth
Latest: -1.8% previous: -3.4% prior: -5.1%

FACTS: In September, the Teranet–National Bank Composite House Price IndexTM was up 1.3% from the month before, the fifth consecutive monthly rise after eight consecutive declines. In September, prices were up in five of the six metropolitan areas covered: Vancouver +2.1%, Toronto +1.5%, Calgary +1.1%, Ottawa +0.9% and Halifax +0.6%. In Montreal, prices edged down 0.2%. In the three easternmost markets covered – Ottawa, Montreal and Halifax – prices have exceeded their pre-recession peak. In the three other metropolitan markets, prices are still down from their pre-recession peak: Toronto (−1.5% from August 2008), Calgary (−12.0% from August 2007) and Vancouver (−5.8% from June 2008). The composite index is down
2.2% from its pre-recession peak of August 2008.

OPINION: With the Teranet-National Bank composite index close to its pre-recession level, September report shows more than ever that the home price correction experienced in Canada was benign when compared to the U.S. (top chart). Prices are up from a year ago in the three easternmost metropolitan areas covered, and Toronto could join the club as soon as next month (middle chart). This would leave Calgary and Vancouver the only cities where prices still have some way to go in order to post twelve-month increases. In the U.S., none of the 20 cities covered have posted price increases over the last twelve months. This shows that home price correction in Canada had a strong regional aspect. As for Montreal, the isolated slight house price decline in September does not reflect market conditions according to data from the Greater Montreal Real Estate Board. Listings represent less than 6 months of sales, a rather historically low level (bottom chart), giving no indication that houses listed for sales are too plentiful as was the case at the end of last year.

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Published on  Wed, Nov 25 2009, 15:01 GMT