The Teranet-National Bank Index continued to decline in February so that the cumulative decline in prices since their peak in May 2022 totaled 11.2%, the largest contraction in the index ever recorded. The current decline in prices has even surpassed the 9.2% loss in value that occurred during the 2008 financial crisis. With the Bank of Canada expected to keep its policy rate in restrictive territory well into 2023 and mortgage rates remaining high, we believe that the impact on property prices should continue to be felt in the coming months. All in all, we still anticipate a total correction of about 15% nationally by the end of 2023, but this assumes that policy rate hikes are over and declines begin at year-end. Although corrections are being seen in all markets covered by the index, the CMAs that have seen the largest price growth over the past two years are also those that have seen the largest declines to date. Ontario, British Columbia and the Maritimes thus appear to be more vulnerable, while the Prairie markets are less vulnerable, as affordability issues are less acute.
Month-Over-Month
Before seasonal adjustments, the Teranet-National BankTM Composite House Price Index decreased by 0.3% from January to February, a smaller decline than the 1.1% decrease observed last month.
After adjusting for seasonal effects, the Teranet-National BankTM Composite House Price Index decreased by 0.5% from January to February, the tenth consecutive monthly decline. In February, 7 of the 11 CMAs included in the index experienced contractions: Toronto (-2.7%), Calgary (-2.4%), Halifax (-1.8%), Edmonton (-0.8%), Hamilton (-0.3%), Montréal (-0.3%) and Ottawa-Gatineau (-0.2%). Conversely, prices increased during the month in Vancouver (+3.8%), Victoria (+1.9%) and Québec (+0.1%), while they remained stable in Winnipeg. For the other CMAs not included in the composite index, a decrease was observed in 11 of the 20 CMAs for which data is available in February. The largest monthly decreases were observed in Thunder Bay (-12.5% after a gain of 2.8% the previous month) and Sherbrooke (-10.5% after a gain of 9.0% the previous month). Conversely, notable increases were observed in Trois-Rivières (+7.7% after a decrease of 9.0% the previous month) and Guelph (+6.6% after a decrease of 9.4% the previous month).
Year-Over-Year
The Teranet-National BankTM Composite Home Price Index, which covers eleven CMAs across the country, declined by 4.7 percent from February 2022 to February 2023, the second consecutive month in which the annual change in the index was in negative territory. Increases were still observed in 4 of the 11 cities that make up the composite index in February. Calgary led the way with a year-over-year price increase of 8.8%, followed by Quebec City with a 5.0% gain, and Edmonton with a 1.9% increase. As for the lagging markets, prices fell the most in Hamilton (-14.0%), Toronto (-8.8%) and Vancouver (-3.9%). As for the other 20 CMAs not included in the composite index, positive annual gains were observed in 5 of them. The strongest growth was recorded in Trois-Rivières (+12.4%) and Saint John (+12.1%), while the largest declines were in Abbotsford-Mission (-15.1%), Guelph (-16.6%) and Thunder Bay (-17.5%).
Click here to view the full report.
Teranet-National Bank House Price Index Decline Less Significant in February
Recent Comments