The Teranet-National Bank Composite Index™ continued its correction for a third consecutive month in December, with prices down 0.5% compared to November in a context where the number of transactions on the resale market continues to be weak, despite a rebound during the month. Indeed, persistent affordability issues (despite the recent drop in fixed mortgage rates), combined with a less buoyant job market, have contributed to the decline in property prices. Despite a less vigorous economy, we are not yet witnessing a wave of additional supply on the real estate market. In fact, active listings declined in December, and the number of months of inventory fell from 4.2 in November to 3.8 during the month, helping to limit the fall in prices. For the months ahead, prices should continue to decline despite the support of historical population growth and the shortage of housing supply, as the deterioration in the labour market is set to continue. We expect the composite index to return close to its early 2023 low by late spring, with a cumulative decline of around 8% from its April 2022 peak. For their part, the interest rate cuts expected to begin in Q2 should set the stage for market stabilization in the second half of the year.

Month-Over-Month

After adjusting for seasonal effects, the Teranet-National Bank Composite House Price Index™ , which covers the country’s eleven largest CMAs, declined by 0.5% from November to December, the third consecutive monthly decrease. In December, four of the 11 CMAs included in the index experienced decreases: Victoria (-3.9%), Vancouver (-1.5%), Toronto (-0.8%) and Ottawa-Gatineau (-0.3%). Conversely, increases were recorded in Calgary (+2.3%), Halifax (+2.2%), Quebec City (+0.9%), Hamilton (+0.9%), Winnipeg (+0.6%) and Montreal (+0.5%), while prices remained stable in Edmonton. On the other hand, prices fell in 14 of the 18 CMAs not included in the composite index for which data are available in December. The biggest monthly decreases were seen in Guelph (-7.0%), Peterborough (-4.9%) and Kitchener (-4.3%). Conversely, the biggest increases were in Sherbrooke (+5.9% after a 3.9% drop the previous month) and Barrie (+5.6% after a 3.4% drop the previous month).

Before seasonal adjustments, the Teranet-National Bank Composite House Price Index™ fell by 1.3% from November to December, the fourth consecutive monthly decline and the largest since November 2022.

Year-Over-Year

The Teranet-National Bank Composite Home Price Index™ rose by 3.0% from December 2022 to December 2023. Increases were observed in 9 of the 11 cities making up the composite index in December. Halifax led the way with a 10.3% year-on-year price increase, followed by Calgary with an 8.8% gain and Quebec City with 8.7% growth. As for lagging markets, prices fell in Edmonton (-1.6%) and remained stable in Victoria. As for the other 18 CMAs not included in the composite index, annual gains were observed in 8 of them. The strongest growth was recorded in Sherbrooke (+14.0%) and Brantford (+9.9%), while the steepest declines were in Kingston (-7.9%), Oshawa (-2.4%) and St. Catharines (-2.3%).

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Teranet-National Bank House Price Index Ends The Year Down