Even though the resale housing market is showing its first signs of stabilization and the non-seasonally adjusted Teranet-National Bank Index has seen its first monthly increase in ten months, it is still too early to say that the real estate market in Canada is on the rise. In fact, once adjusted for seasonal effects, the composite index contracted by 0.8% during the month, as price growth is generally stronger in the spring with the start of the high season. It should also be noted that, on an annual basis, the index in March fell by 6.9% compared to March 2022 and thus equaled the record contraction recorded during the 2008-2009 financial crisis. With the Bank of Canada expected to keep its policy rate in restrictive territory for much of 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 anticipate that the price correction that currently stands at 8.8% could continue through the end of 2023 (-5% additional), but this assumes that policy rate hikes are over, and declines begin at the end of the year. Although corrections are observed in all markets covered by the index (except Sherbrooke), the CMAs that have experienced the largest price growth over the past two years are also those that have recorded the sharpest declines to date. Ontario and British Columbia thus appear to be more vulnerable, while the Prairie markets are less so, as affordability problems are less acute.

Month-Over-Month

Before seasonal adjustments, the Teranet-National Bank™ Composite House Price Index increased by 0.5% from February to March, the first increase in ten months.

However, after adjusting for seasonal effects, the Teranet-National Bank™ Composite House Price Index decreased by 0.8% from February to March, the ninth consecutive monthly decline. In March, 7 of the 11 CMAs included in the index experienced contractions: Victoria (-4.5%), Winnipeg (-2.4%), Toronto (-1.9%), Edmonton (-0.9%), Hamilton (-0.1%), Quebec City (-0.1%) and Ottawa-Gatineau (-0.1%). Conversely, prices increased during the month in Halifax (+2.3%), Montreal (+0.5%), Vancouver (+0.3%) and Calgary (+0.1%). For the other CMAs not included in the composite index, a decrease was observed in 12 of the 20 CMAs for which data is available in March. The largest monthly decreases were observed in Peterborough (-3.8%) and Oshawa (-3.1%). Conversely, notable increases were observed in Thunder Bay (+14.9% after a decrease of 12.0% the previous month) and Sherbrooke (+13.6% after a decrease of 11.5% the previous month).

Year-Over-Year

The Teranet-National Bank™ Composite Home Price Index, which covers eleven CMAs across the country, declined by 6.9% from March 2022 to March 2023, slightly worse than the previous record contraction recorded during the 2008-2009 financial crisis. Increases were still observed in 3 of the 11 cities that make up the composite index in March. Calgary led the way with a 7.6% year-over-year price increase, followed by Quebec City with a 4.1% gain, and Edmonton with a 2.2% increase. As for the lagging markets, prices fell the most in Hamilton (-13.5%), Toronto (-12.1%) and Victoria (-8.7%). As for the other 20 CMAs not included in the composite index, positive annual gains were observed in 7 of them. The strongest growth was recorded in Trois-Rivières (+18.8%) and Sherbrooke (+12.4%), while the largest declines were in Oshawa (-19.3%), Abbotsford-Mission (-17.7%), Peterborough (-17.2%) and Guelph (-15.8%).

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Record Annual Decline in The Teranet-National Bank House Price Index in March

Record Annual Price Decline in March by Teranet-National Bank of Canada