Providing Thoughtful Analysis on the Housing Market
Wednesday, October 28, 2009
Teranet House Price Index for August 2009
A second consecutive month of price rises in all survey markets
Canadian home prices in August were down 3.4% from their pre-correction peak of August 2008, 12 months earlier, according to the Teranet-National Bank National Composite House Price Index. It was the eighth consecutive 12-month decline, but the 12-month decline has been diminishing steadily since it peaked at 6.9% in May. The reason is that August is the fourth straight month in which the index reading for Canada as a whole has been up from the month before. The August rise of 2.0% was particularly vigorous. It was the second month in a row in which prices were up from the month before in all six of the metropolitan markets represented in the index. This turnaround is consistent with an improvement in market conditions in the first half of 2009 - more homes have been selling and fewer have been coming on the market.
Teranet – National Bank National Composite House Price Index™
The monthly rises in August were 2.7% in Toronto, 2.0% in Calgary, 1.7% in Vancouver, 1.5% in Ottawa, 1.2% in Montreal and 0.6% in Halifax. For Toronto it was the fourth consecutive rise of 2% or more, taking the cumulative gain to 9.4% in just four months. By way of comparison, Montreal showed a sixth consecutive rise but the cumulative six-month gain was only 4.8%.
In the three easternmost markets, Montreal, Halifax and Ottawa, August prices were above the pre-recession peak. Toronto prices are now down only 3.0% from their August 2008 peak. Vancouver prices are still down 7.7% from their June 2008 peak and Calgary's are down 12.9% from their peak of August 2007, two years earlier.
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 Economy & Strategy team National Bank Financial Group
Teranet - National Bank House Price Index™ thanks the author for their special collaboration on this report.
1 Value of Dwelling for the Owner-occupied Non-farm, Non-reserve Private Dwellings of Canada.
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The Teranet - National Bank House Price Index™ is an independently developed representation of the rate of change of Canadian single-family home prices. The measurements are based on the property records of public land registries. The monthly indices cover six Canadian metropolitan areas: Calgary, Halifax, Montreal, Ottawa, Toronto and Vancouver. The metropolitan areas are combined to form a Canadian composite index.
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