Providing Thoughtful Analysis on the Housing Market
Saturday, January 02, 2010
October 2009 Teranet House Price Index
Slower monthly price rises in three out of six markets
Canadian home prices in October were up 0.6% from a year earlier, according to the Teranet-National Bank National Composite House Price Index. It was the first 12-month rise in almost a year. The reason for this turnaround after 10 consecutive months of 12-month deflation is that October was the sixth straight month in which the composite index was up from the month before. The monthly gain of 1.3% was the same as in September. Prices have now risen 1% or more for five months in a row. In October, however, the monthly rise varied significantly among the six metropolitan markets surveyed.
Teranet – National Bank National Composite House Price Index™
In only two of the six were prices up more than 1% from the month before - Toronto, 1.6%, and Vancouver, 1.8%. The Calgary gain of 0.8% remained vigorous. But in the other three markets the rise was much more modest: Halifax 0.4%, Ottawa 0.3%, and Montreal 0.3%. In each of these three cities the monthly appreciation was the smallest since market bottom (except for one monthly decline each in Montreal and Halifax). Toronto is now the fourth market to top its pre-recession summit (August 2008). Toronto prices fell 11.3% over the eight months from that peak through last April and then climbed 12.9% (an annual rate of 27.4%) over the six months to October, recovering the lost ground and a bit more. In Vancouver, October prices were still down 4.1% from the peak of June 2008. In Calgary, they were down 11.3% from the peak of August 2007.
These two cities were also the only markets still showing 12-month deflation - 3.6% in Calgary, 2.2% in Vancouver. Twelve-month inflation was 3.4% in Montreal, 3.1% in Halifax, 3.1% in Ottawa and 2.3% in Toronto.
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.