Wednesday, December 19, 2012

Teranet House Price Index for December 2012



The Teranet-National Bank National Composite House Price Index™ for November was up 3.3% from a year earlier, for a 12th consecutive month of deceleration in 12-month inflation. Up through September this cross-country trend was replicated in the Vancouver market, but this is no longer the case. In Montreal 12-month inflation has decelerated in 11 of the last 12 months, in Toronto in each of the last seven months, in Winnipeg in each of the last five months, in Ottawa-Gatineau in eight of the last 10 months. The 12-month price change continues to vary widely by market. In November the 12-month gain exceeded the national average by a wide margin in five metropolitan areas: Halifax (7.3%), Hamilton (7.2%), Toronto (6.3%), Calgary (5.7%) and Winnipeg (5.2%). It lagged the average in four markets: Montreal (2.8%), Quebec City (2.7%), Ottawa-Gatineau (2.2%) and Edmonton (1.6%). Prices were down from a year earlier in Vancouver (−1.4%) and Victoria (−1.7%).

Teranet – National Bank National Composite House Price Index™

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The composite index was down 0.4% from October. It was the fourth November monthly decline in 13 years of data, including November 2008 when the country was on the verge of recession. For the first time since February 2009, when the recession was in full swing, prices were down from the month before in 10 of the 11 metropolitan markets surveyed. For Quebec City (−0.1%) and Victoria (−0.9%) it was the fourth straight monthly decline. For Montreal (−0.4%) and Ottawa-Gatineau (−0.5%) it was the third, for Toronto (-0.3%) and Halifax (−0.9%) the second. Prices were also down in Vancouver (-0.6%), Edmonton (−0.9%), Hamilton (-0.3%) and Winnipeg (-0.7%). Only in Calgary were prices up from the month before (0.4%). The Winnipeg and Hamilton markets nevertheless rate as tight by the criterion of seasonally adjusted new listings to sales as published by the Canadian Real Estate Association.

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/y
Calgary162.610.4 %5.7 %
Edmonton166.28-0.9 %1.6 %
Halifax140.92-0.9 %7.3 %
Hamilton139.75-0.3 %7.2 %
Montreal148.45-0.4 %2.8 %
Ottawa140.75-0.5 %2.2 %
Quebec170.14-0.1 %2.7 %
Toronto147.33-0.3 %6.3 %
Vancouver167.51-0.6 %-1.4 %
Victoria138.20-0.9 %-1.7 %
Winnipeg188.60-0.7 %5.2 %
National Composite 6153.17-0.3 %3.3 %
National Composite 11154.02-0.4 %3.4 %
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
Teranet - National Bank House Price Index™ thanks the author for their special collaboration on this report. 

Tuesday, December 18, 2012

BC Population Growth to Q3 2012

BC Stats released its quarterly population estimates and BC continues sluggish growth through Q3 2012.

Population growth consists of the following bulk components:
  • Natural increase (births - deaths)
  • Net interprovincial migration
  • Net international migration (including permanent and non-permanent residents (NPRs))
So let's look at how recent quarters look in a historical context, here graphed since 1961 to show longer-term trends (there is seasonality so quarters are best compared to each other, also do not integrate these graphs, the total population is periodically adjusted during census counts):

The most recent Q3-2012 data indicate continued negative net interprovincial migration (2748 net out of the province).

Population growth through third quarter of 2012 is below its peak of late last decade, due in most part to net out-migration to other provinces and below-average net international migration. Q3 growth has dropped 39% since its recent local peak in 2007, meaning population growth this year was about 10,000 fewer in the quarter. This will have a direct and negative impact on housing demand in the coming quarters. Interprovincial out-migration is of continued concern, with more people leaving the province for others than arriving.

Tuesday, December 04, 2012

Greater Vancouver Market Snapshot November 2012

Below are updated sales, inventory and months of inventory graphs for Greater Vancouver to November 2012. (see REBGV news releases.)

The scatterplot of price changes and months of inventory is below. As the Teranet data roll in, look for more points appearing the right-hand side.


November continued with relative weakness compared to not only 2011 but also past years from 2005 (except the residual emerging from the recession of 2008-2009). November sales are near lows in at least the past decade, though above levels seen in 2008.

To partially compensate for weekend framing effects I have plotted sales per working day on a month-by-month basis. Using this more accurate gauge we can see that November is weaker than October and about in-line with September:

This November saw another weak report. Sales year-to-date are bad and this has direct effects on incomes of those who depend on resale turnover for income. I would not be surprised to see the Teranet HPI down between -6% and -4% year-on-year by February or March of 2013.

As a recurring reminder, there are some worrying clouds on the horizon: population growth is falling, dwelling completions are set to increase over the next year if not longer, and banks have implemented stricter mortgage guidelines via changes to government-underwritten mortgage insurance qualification criteria and via implementation of stricter mortgage lending guidelines under OSFI's new directives. (Credit Unions are one notable exception though it appears BC CUs will comply with the brunt of OSFI guidelines.) Further stress in current conditions can be attributed to China's slower economic growth.

On the other hand mortgage rates remain low, near net zero real territory, and it is possible for rates to remain low for a prolonged period (i.e. several years). It looks likely that Asian economies are currently meting out another round of investment spending through coordinated government stimulus measures -- not only in Asia but also in other jurisdictions -- and that can plausibly lead to a renewed, but in my view temporary, bout of current account flows into Vancouver-area property investments.

Based on taking the average ratios of sales in December to sales in September through November from previous years I am estimating December 2012 sales to be 1159 +/- 34 (one sd). Last month I got lucky and my estimate was only off by 14.

Sigh. Yet another weak report for resale housing activity in the Vancouver area. This is not at all pleasant to type.