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Teranet-National Bank House Price Index

Review of Spring/Summer Real Estate Market Activities

By September 23, 2019No Comments

The spring and summer real estate market in Canada is normally one of the strongest of the year — but how did 2019 fare? With fall officially here, we are looking at the real estate market trends and Canadian house prices that spring/summer 2019 brought.

  1. Bank of Canada Interest Rates Stayed the Same

While the Bank of Canada (BOC) wasn’t expected to raise interest rates during spring or summer 2019, some economists thought they might decrease them — particularly following the action from the U.S. Federal Reserve.

However, that did not happen. Instead, the BOC kept the overnight interest rate at the same target it has been since October of 2018 — 1.75%.

While this may not have had as much of an impact on the Canadian real estate market as an increase or decrease might have, it still shaped how consumers spent their money and looked at home equity during the spring and summer months.

Of particular interest was a note from the BOC during the September 4 interest rate announcement where they stated that while Canadians are earning more money, they aren’t necessarily spending more. In the same report, the BOC noted that Canadian housing market activity “has regained strength more quickly than expected as resales and housing starts catch up to underlying demand, supported by lower mortgage rates.”

  1. National House Price Index Accelerated for First Time in Nine Months

In August 2019, the Teranet-National Bank National Composite House Price Index accelerated for the first time in nine months.

While June, July, and August all saw small increases to the national composite index, both June and July would not have increased with the seasonal pressures removed so the rises weren’t necessarily seen as a sign of market vigour.

In August, on the other hand, the composite index would have regained ground even with the seasonal pressures taken out.

“In other words,” the August HPI report stated, “the recent run of months that showed an underlying downtrend after correction for seasonal pressure has come to an end.”

  1. Central and Eastern Canadian Home Prices Rose Year-Over-Year, but Western Canada Flagged

At the end of summer 2019, three index markets were down year-over-year: Vancouver by 6.6%, Edmonton by 3.1%, and Calgary by 2.3%.

Victoria and Winnipeg rose, albeit slightly, by 0.7% and 1.1% respectively.

Of the other markets, central and eastern Canada fared better. Year-over-year, Toronto rose by 3.8%, Hamilton by 4.4%, Halifax by 5.5%, Montreal by 5.7%, and Ottawa-Gatineau by 6.4%. Quebec City saw only a slight increase of 0.1%.

Indexes in Ontario’s Golden Horseshoe rose “sharply” between February and August 2019 with Oshawa, Brantford, Barrie, Peterborough, Guelph, Kitchener, and St. Catharines all seeing increases.

Windsor and London also saw large gains of 11.4% and 10.1% respectively since August 2018 and Kingston, Sudbury, and Thunder Bay fared well, too.

  1. Housing Affordability Improved

In the second quarter of 2019, housing affordability improved by the most since 2009.

According to the National Bank Housing Affordability Monitor, the decline in mortgage rates was the most significant factor, combined with a healthy labour market and home prices declining.

Vancouver experienced the largest progression in affordability among urban markets in Q2, and Toronto saw a large improvement in the non-condo market and some progress also in the condo market.

Review all the spring/summer 2019 house price data from the Teranet-National Bank House Price Index:

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