Providing Thoughtful Analysis on the Housing Market
Wednesday, February 24, 2010
Teranet House Price Index for December 2009
The composite index above the pre-recession peak
Canadian home prices in December were up 5.2% from a year earlier, double the 12-month advance recorded in November, according to the Teranet-National Bank National Composite House Price Index. December was the third consecutive month in which prices were up from a year earlier, after 10 consecutive months of 12-month deflation. The turnaround is due to eight straight monthly increases in the countrywide index. December's robust 1.2% monthly gain pushed the composite index above the pre-recession peak, that is, to a new record.
Teranet – National Bank National Composite House Price Index™
The December monthly rise exceeded 1% in four of the six metropolitan markets surveyed: Calgary (1.6%), Vancouver (1.3%), Toronto (1.2%) and Montreal (1.1%). For Montreal it was the first vigorous increase in four months, corroborated by data from the Greater Montreal Real Estate Board showing a tightening of the resale market in December. The Vancouver gain, though slightly greater than Montreal's, was the smallest recorded in the seven months since prices in this market began rising again. For Toronto it was the second smallest.
Halifax-area prices declined 1.9%, their first retreat in six months. The monthly rise in the Ottawa market was 0.4%, about the same as in the previous two months.
The 12-month appreciation was 7.1% in Toronto, 6.2% in Ottawa, 5.1% in Vancouver, 5.0% in Montreal, 2.9% in Halifax and 0.1% in Calgary. It was the first time in 18 months that Calgary prices were higher than a year earlier. Vancouver having passed that point in November, 12-month deflation is now a thing of the past in all of the markets surveyed. However, Calgary prices are still down 9.3% from their pre-recession peak of August 2007 and Vancouver prices are down 1.1% from their peak of June 2008.
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 Group 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.