Providing Thoughtful Analysis on the Housing Market
Wednesday, April 29, 2009
Teranet House Price Index - April 2009
A downtrend now extending from sea to sea
Canadian home prices in February were down 4.1% from a year earlier, according to the Teranet–National Bank National Composite House Price Index™. The disinflation that began in February 2008 is now a year old. The retreat means that on the whole, Canadian housing has become a buyer’s market after five years of seller’s-market conditions from 2002 to 2007. February was also the sixth consecutive month in which the composite index was down from the month before – the longest run of monthly declines over the nine years covered by the index. The composite is now down 7.4% from its peak of last August.
Teranet – National Bank National Composite House Price Index™
Of the six constituent city indices, four were down from a year earlier: Calgary (−8.1%), Vancouver (−6.4%), Toronto (−5.0%) and, new to the list, Halifax (−0.5%). While prices were still up from a year earlier in Montreal (3.2%) and Ottawa (2.8%), the 12-month increase in those two cities has decelerated markedly in recent months.
The recent trend of month-to-month declines in the composite index has now spread to all six markets. For Calgary and Vancouver it was the eighth straight monthly decline, for Toronto the sixth, for Ottawa the fourth. Halifax has shown monthly declines in six of the last eight months, Montreal in four of the last five months. The declines from index peak range from 1.6% in Montreal to 12.0% in Calgary.
The Teranet–National Bank House Price Index™ is estimated by tracking observed or registered home prices over time using data collected from public land registries. All dwellings that have been sold at least twice are considered in the calculation of the index. This is known as the repeat sales method; a complete description of the method is given at www.housepriceindex.ca.
The Teranet–National Bank House Price Index™ is an independently developed representation of average home price changes in six metropolitan areas: Ottawa, Toronto, Calgary, Vancouver, Montreal and Halifax. The national composite index is the weighted average of the six metropolitan areas. The weights are based on aggregate value of dwellings as retrieved from the 2006 Statistics Canada Census. According to that census1, the aggregate value of occupied dwellings in the metropolitan areas covered by the indices was $1.168 trillion, or 53% of the Canadian aggregate value of $2.207 trillion.
All indices have a base value of 100 in June 2005. For example, an index value of 130 means that home prices have increased 30% since June 2005.
Marc Pinsonneault Senior Economist Economic & Strategy Team National Bank Financial Group
Teranet - National Bank House Price Index™ thanks the author for his special collaboration on this report.