Price growth was spurred by surging home values in eight out of 11 major metropolitan markets
In July, Canadian home prices saw their second strongest monthly increase ever after the one registered 17 years ago, according to the latest Teranet-National Bank composite index.
The index, which covers average prices in Canada’s eleven largest census metropolitan areas, grew by 1.8% from June to July excluding adjustments. This also represented the fifth straight monthly increase for the index, Teranet and National Bank said in their report accompanying the latest data release.
Taking seasonal effects into account, the index rose by 2.4% from June to July, which was the fourth consecutive monthly increase. This was just behind the highest adjusted monthly increase of 3.1% reported back in July 2006.
The trend was propelled by increases in eight of the 11 CMAs that the index monitors. The largest proportional growth in July was registered in Halifax (4.9%), followed by Hamilton (4.4%), Vancouver (3.9%), and Toronto (3.5%).
Modest upticks were also reported in Victoria (1.6%), Winnipeg (1.3%), Ottawa-Gatineau (0.6%), and Edmonton (0.3%). On the other hand, the index fell in Quebec City (-1.2%), Montreal (-0.9%), and Calgary (-0.3%) last month.
“The deep declines that we saw through 2022 are largely being unwound,” BMO chief economist Douglas Porter told BNN Bloomberg. “I think what we’re going to see is that this may be the last hurrah for a while for home prices.”
Canadian home prices could drop by 10% in early 2024, but affordability won't recover soon, says Oxford Economics' Tony Stillo. https://t.co/UZ23NGCYEl#mortgagenews #mortgageindustry #houseprices #affordability
— Canadian Mortgage Professional Magazine (@CMPmagazine) August 11, 2023
Prices to grow steadily for the rest of the year
The third quarter of 2023 could see the continuation – and even intensification – of these trends, mainly due to the impact of robust population growth and persistent housing inventory shortages, according to National Bank of Canada economist Daren King.
“The deterioration in affordability with recent interest rate hikes in a less buoyant economic context should represent a headwind for house prices thereafter,” King said. “The recent upturn in prices has been greatest in the cities that have seen the biggest corrections.”
