July 2012 Teranet House Price Index

OME PRICES IN JULY UP 4.8% FROM A YEAR EARLIER Monthly changes in the Teranet-National Bank National Composite House Price Index™ tend to be greater in May and June of each year. True to form, this year's July increase was 0.7% after monthly rises of more than 1% in both May and June. The July gain, the fifth in a row, nevertheless took the index to a new high for a third consecutive month. The composite gain was exceeded in four of the 11 metropolitan markets surveyed: prices were up 2.0% in Hamilton, Quebec City and Victoria and 1.6% in Toronto. The other seven markets lagged the composite: rises of 0.6% in Ottawa-Gatineau, 0.4% in Edmonton and Montreal, 0.3% in Winnipeg, 0.2% in Calgary and 0.1% in Halifax, with a decline of 0.5% in Vancouver. The Vancouver retreat, the first in five months, ended a run of two months in which prices had not fallen in any of the 11 markets. Halifax has had the longest run of monthly increases, nine, followed closely by Toronto and Montreal with eight each. Teranet – National Bank National Composite House Price Index™

Since monthly changes are subject to seasonal factors, the 12-month change is revealing. In July the composite index was up 4.8% from a year earlier, an eighth consecutive month of deceleration in 12-month inflation. Since prices rose 1.0% from July to August last year, further deceleration is possible in August 2012. However, the only market in which 12-month inflation has followed the national composite in decelerating for eight straight months is Vancouver. In Montreal inflation has decelerated in seven of the last eight months. Four of the 11 markets show 12-month inflation exceeding the national average: Toronto 9.2%, Winnipeg 7.4%, Hamilton 5.9% and Halifax 5.4%. The 12-month gain was 4.3% in Montreal, 4.2% in Quebec City, 3.4% in Ottawa-Gatineau, 2.5% in Edmonton, 1.6% in Vancouver and 1.1% in Calgary. Despite Victoria's sharply monthly rise, its prices were down 0.4% from a year earlier. Teranet – National Bank House Price Index™ The historical data of the Teranet – National Bank House Price Index™ is available at www.housepriceindex.ca. Metropolitan area Index level July % change m/m % change y/y Calgary 160.68 0.2 % 1.1 % Edmonton 167.40 0.4 % 2.5 % Halifax 140.92 0.1 % 5.4 % Hamilton 136.41 2.0 % 5.9 % Montreal 150.19 0.4 % 4.3 % Ottawa 141.95 0.6 % 3.4 % Quebec 173.16 2.0 % 4.2 % Toronto 147.32 1.6 % 9.2 % Vancouver 172.44 -0.5 % 1.6 % Victoria 143.15 2.0 % -0.4 % Winnipeg 188.40 0.3 % 7.4 % National Composite 6 154.50 0.6 % 5.1 % National Composite 11 155.28 0.7 % 4.8 % 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. By: Marc Pinsonneault Senior Economist Economy & Strategy Group National Bank of Canada 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.