Wednesday, March 30, 2011

Teranet Index - January 2011

Home prices up 0.4% in January

Canadian home prices in January were up 0.4% from the previous month, according to the Teranet-National Bank National Composite House Price Index™. It was the second consecutive monthly rise, following on three consecutive monthly declines. January prices were up from the previous month in four of the six metropolitan markets surveyed: 0.9% in Vancouver, 0.5% in Toronto, 0.4% in Halifax and 0.3% in Montreal. Prices were down 0.6% in Ottawa, a fifth straight monthly decline, and 1.0% in Calgary, a fifth decline in six months. Thus the correction of late last year turned out to be short-lived for the country as a whole - three months - and longer-lasting in Ottawa and Calgary.

The 12-month gain in the composite index slowed to 3.9% in January, the seventh consecutive month of deceleration. The largest 12-month rise was 8.2% in Halifax. It remains to be seen whether this lead will last, since the small number of transactions normally recorded in Halifax in December and January could make its reading less stable. The 12-month increase was 6.4% in Montreal, 5.3% in Ottawa, 5.1% in Vancouver and 3.9% in Toronto. Only in Calgary were prices down from a year earlier, by 3.4%.

Data for February from the Canadian Real Estate Association show generally balanced conditions in major urban markets. Relative to the average, conditions in Calgary were better for buyers and conditions in Vancouver better for sellers, a finding consistent with the movement of the Teranet-National Bank indices for these markets. The Toronto market is no longer tightening. Between January 17, when the federal minister of finance announced that the maximum amortization period for an insured mortgage would be reduced to 30 years from 35 years, and March 18, the announced effective date, the resale market may have been influenced by the prospect of this change.

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
Economy & Strategy Group
National Bank Financial Group

Teranet - National Bank House Price Index™ thanks the author for their special collaboration on this report.

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