After adjusting for seasonal effects, the Teranet-National Bank composite HPI resumed its upward trend (+0.6%) after ten consecutive monthly declines, which saw home prices correct by a total of 8.6%. This turnaround in property prices is due in particular to the rebound in the resale market over the past four months. This recovery is taking place against a backdrop of record demographic growth, which is accentuating the shortage of housing supply on the market. With domestic housing starts falling to their lowest level in three years in May, there is no reason to believe that the shortage of properties on the market will be resolved any time soon. However, the resumption of the monetary tightening cycle by the Bank of Canada in recent weeks and the expected slowdown in economic growth could moderate price growth later this year.

Month-Over-Month

Before seasonal adjustments, the Teranet-National BankTM Composite House Price Index, which covers the country’s eleven largest CMAs, rose by 1.6% from April to May, the third consecutive monthly increase.

After adjusting for seasonal effects, the Teranet-National BankTM Composite House Price Index rose by 0.6% from April to May, the first monthly increase in eleven months. In May, 8 of the 11 CMAs included in the index posted increases: Toronto (+1.6%), Winnipeg (+1.5%), Victoria (+1.3%), Edmonton (+1.3%), Quebec City (+1.2%), Montreal (+1.0%), Hamilton (+0.5%) and Calgary (+0.1%). Conversely, prices fell during the month in Halifax (-2.6%), Vancouver (-1.2%) and Ottawa-Gatineau (-0.3%). For other CMAs not included in the composite index, growth was observed in 10 of the 20 CMAs for which data is available in May. The strongest monthly increases were seen in Sudbury (+4.9%), Guelph (+4.7%) and Kingston (+4.6% after a drop of 11.6% the previous month). Conversely, notable decreases were recorded in Brantford (-8.1%) and Sherbrooke (-4.5%).

Year-Over-Year

The Teranet-National BankTM Composite Home Price Index fell by 7.6% from May 2022 to May 2023, a smaller annual contraction than the record drop recorded the previous month. Increases were still observed in 3 of the 11 cities making up the composite index in May. Calgary led the way with an 8.3% year-on-year price increase, followed by Edmonton with a 4.9% gain and Quebec City with 3.1% growth. As for the lagging markets, prices fell most sharply in Hamilton (-16.8%), Toronto (-10.3%) and Ottawa-Gatineau (-9.5%). As for the other 20 CMAs not included in the composite index, annual gains were observed in 4 of them. The strongest growth was recorded in Saint John (+7.2%) and Trois-Rivières (+3.9%), while the steepest declines were in Brantford (-21.9%), Peterborough (-18.5%), Oshawa (-17.7%) and Abbotsford-Mission (-17.4%).

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Teranet-National Bank House Price Index Increased in May