The Teranet-National Bank Composite Index™ continued its correction for a fourth consecutive month in January, with prices down 0.3% on a seasonally adjusted basis compared with December. It should be noted, however, that the drop in the composite index in January was due solely to lower prices in two major cities where affordability remains a major issue, namely Vancouver and Toronto. As a result, house prices across the country are now 3.7% below their April 2022 peak. However, renewed activity in the resale market raises the question of whether this weakness will persist. This rebound in transactions is taking place against a backdrop of strong demand due to exceptional demographic growth and the reduction in mortgage interest rates since October. Moreover, in a context where the lack of housing supply remains problematic, the end of Bank of Canada rate hikes and potential rate cuts have reduced uncertainty and offered a window of opportunity to some buyers. It remains to be seen whether this upturn will be long-lasting, given that we expect the labour market to experience further difficulties later this 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 0.3% from December to January, the fourth consecutive monthly decrease. However, this decline was due to contractions in only two of the eleven cities included in the index: Vancouver (-2.0%) and Toronto (-0.3%). Conversely, increases were recorded in Edmonton (+1.4%), Montreal (+1.2%), Ottawa-Gatineau (+0.6%), Quebec City (+0.4%), Winnipeg (+0.3%), Hamilton (+0.2%), Victoria (+0.2%), Calgary (+0.1%) and Halifax (+0.1%). On the other hand, 12 of the 18 CMAs not included in the composite index for which data are available in January recorded increases. The strongest monthly increases were seen in Kingston (+10.7%), Thunder Bay (+5.7% after a 3.2% decline the previous month) and London (+5.5% after a 3.4% decline the previous month). Conversely, the biggest declines were in Barrie (-7.9% after an increase of 5.2% the previous month) and Trois-Rivières (-3.4%).

Before seasonal adjustments, the Teranet-National Bank Composite House Price Index™ fell by 1.6% from December to January, the fifth consecutive monthly decline and the largest since September 2022.

Year-Over-Year

The Teranet-National Bank Composite Home Price Index™ rose by 2.4% from January 2023 to January 2024. Increases were observed in all 11 cities making up the composite index in January. Halifax led the way with a 10.1% year-over-year price increase, followed by Quebec City with a 9.6% gain and Calgary with an 8.6% growth. As for lagging markets, prices rose less than average in Toronto (+1.0%), Edmonton (+1.2%) and Victoria (+1.4%). As for the other 18 CMAs not included in the composite index, annual gains were observed in 15 of them. The strongest growth was recorded in Abbotsford-Mission (+13.4%) and Guelph (+11.8%), while the markets of St. Catharines (-2.1%), Barrie (-1.0%) and Kelowna (-0.4%) were still in decline.

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Teranet-National Bank House Price Index Continues to Decline in January

Teranet-National Bank House Price Index – Canada : Prices are Still Declining, But for How Long?