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™

Contact Us

For general enquiries:

For licenses covering all index-linked products, please contact:

Simon Côté
514 879-5379

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.

Teranet – National Bank House Price Index™

The historical data of the Teranet – National Bank House Price Index™ is available at

Metropolitan areaIndex level
% change m/m% change y/yFrom peakPeak date

2007- Aug

Halifax116.97-0.5%-0.5%-4.0%2008 - Nov
Montreal120.58-1.2%3.2%-1.6%2008 - Sep
Ottawa113.76-0.2%2.8%-3.8%2008 - Oct
Toronto106.75-3.1%-5.0%-9.0%2008 - Aug
Vancouver135.27-2.0%-6.4 %-10.2%2008 - Jun
National Composite121.16-2.0%-4.1%-7.4%2008 - Aug

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

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. 


jesse said...

I expect Vancouver's HPI to show a relative levelling in the spring months. Interesting that the HPI and the REBGV/FVREB benchmark prices track each other reasonably well, the benchmark without a lag in the release.

I think it's worthy to call out that, while the benchmark is not transparent, it offers a plausible indicator of the market's prices in a timely manner.

mohican said...

I agree jesse, the real estate board's benchmark seems reasonably accurate and it is quite timely.

The teranet data will inherently be smoother because of the lag but it is useful insofar as it provides another data point with which to confirm the board's data.

Unknown said...

Re post 1&2: And so,.., where do you see the benchmarks for April? Up? Down?

jesse said...

Up 1-2%. I think, despite what a rational investor should do, that low rates are having some effect.

It's hard to say whether the sales are triggered by investors, FTBs or move-up buyers. Last year the latter made up a disproportionate amount of sales, hence the rest of the year being a dud. Hard to say if we'll see the same pattern this year.

See the previous post. The number of units under construction is still very high. These units need to be absorbed into a shrinking rental pool as renters start sharing accommodations, as they are prone to do in a recession.

Despite the outside signs of a relatively strong (i.e. balanced) market, the underlying economics call into question the sustainability of current market prices.

mohican said...

I also see prices rising during April. There are a few people out there who find the combination of lower prices and lower rates quite attractive and I must say that it is the most attractive time to buy in the past three or four years. Monthly payments are much more manageable and you can take time to look around and choose from a wider selection than previously available.

Anonymous said...


What role do you think inflation will play in the future? Given that the printing presses are running at full steam, do you not feel that real estate, even overvalued Vancouver real estate, could be a good asset class to hide in?

AndrewJ said...

That's the question isn't it. I could actually afford where I want to live for the first time in a long time. This is thanks to the low low interest rates and the still loose lending requirements (I would have 20 percent down but might need to go a little above 32 percent GDSR which I'm assuming they still allow.)

The only way I would even consider this is would be to count on inflation to bail me out. Very risky strategy though. I don't see how the US is going to get out of this without inflation. They of course can never say they are going to inflate their way out but really what other option do they have?

mohican said...

If a period of high inflation occurs, interest rates will rise on the open market so we could have a very steep yield curve with 5 year and 10 year mortgage rates exceptionally high. Eventually central banks would need to raise the interbank rate to curb inflation.

Rising rates would crush house prices along with the economy so I expect that central banks will want to postpone this as long as possible hence the prospect of rising home prices along with inflation. This would be temporary however and as inflation becomes more and more of a problem, the prospect of those rising rates looms even larger and the bond market will tell us when inflation is going to become a problem as the yield on long bonds will rise.

Personally, I've chosen to mitigate this risk by matching my mortgage term to my amortization so I have zero rate risk to my personal debts.

Anonymous said...

Only fools fall for low interest rates as a catalyst to buy an overpriced home.

mohican said...

In order to justify a home purchase today, I would look at these criteria:

1) Monthly / Annual costs must be less than rent (include interest costs, opportunity cost, taxes, maintenance, etc)

2) Mortgage amortization must match mortgage rate term - - - NO VARIABLE RATES ALLOWED

3) Home must meet family needs for the length of the term / amortization.

Gprofessionals said...

There is nothing surprising in it. As such graphs are common for all real estate markets around the world. We can expect a comeback for this market only after December.
Highest CD Rates