House Price Index August 2011 - Monthly Report

Canadian home prices up 1.7% in June

Canadian home prices in June were up 1.7% from the previous month, according to the Teranet–National Bank National Composite House Price Index™. This rise took the index to a new high of 144.27 (June 2005 = 100). It was the third consecutive monthly increase exceeding 1% and the largest rise since August 2009. It was also the seventh consecutive monthly increase, coming after three straight monthly declines. As in April and May, prices were up in all six of the metropolitan markets surveyed. What is new is that in all six markets the June monthly rise was at least 1%, a first since April 2005. It was 2.0% in Toronto, 1.7% in Vancouver and Ottawa, 1.6% in Calgary, 1.1% in Montreal and 1.0% in Halifax. For Vancouver it was the ninth consecutive gain, the longest run of monthly rises among the markets covered. For five of the six metropolitan areas the indexes were at all-time highs. The Calgary index is still 10.9% off the all-time high of August 2007 and 3.1% off the pre-correction peak of August 2010.

Teranet – National Bank National Composite House Price Index™

The 12-month gain of the composite index in June was 4.5%, barely more than the 4.4% of April and May. It may seem surprising that 12-month inflation has not been accelerating in step with the recent pace of monthly increases. The reason is that in May and June 2010 the composite index was gaining more than 1% monthly.

In June the largest 12-month rise was 7.2% in Vancouver, followed by 5.9% in Montreal, 4.6% in Ottawa, 4.4% in Halifax and 4.2% in Toronto. Vancouver stands out with three consecutive months of accelerating 12-month inflation. Though Montreal’s 12-month inflation was the second highest of the six markets, it decelerated in June for a third straight month. Twelve-month inflation decelerated for a sixth consecutive month in Halifax. Calgary prices were down 2.7% from a year earlier, for a ninth consecutive month of 12-month deflation.

In July, according to seasonally adjusted data from the Canadian Real Estate Association, market conditions were balanced in the country as a whole while appearing tight in Toronto.

 

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
June
% change m/m % change y/y
Calgary 156.25 1.6 % -2.7 %
Halifax 135.59 1.0 % 4.4 %
Montreal 142.87 1.1 % 5.9 %
Ottawa 135.87 1.7 % 4.6 %
Toronto 131.26 2.0 % 4.2 %
Vancouver 167.77 1.7 % 7.2 %
National Composite 144.67 1.7 % 4.5 %

 

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 Financial Group

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

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