Good news for investors and other homeowners but affordability remains elusive for would-be buyers
Despite concerns about cracks starting to emerge in the Canadian housing market, prices are still rising according to a key index.
The Teranet-National Bank National Home Price Index for July reveals a sharp rise in prices across eleven metropolitan areas at 2.4% (seasonally adjusted) month-over-month, marking the fourth consecutive monthly increase and the second-largest monthly gain ever recorded by the index (behind the 3.6% rise in July 2006).
There were gains in 8 out of the 11 metros included: Halifax (4.9%), Hamilton (4.4%), Vancouver (+3.9%), Toronto (+3.5%), Victoria (+1.6%), Winnipeg (+1.3%), Ottawa-Gatineau (+0.6%), and Edmonton (+0.3%). Prices fell in Quebec City (-1.2%), Montreal (-0.9%), and Calgary (-0.3%).
Year-over-year there was still a decline but the 1.9% drop was smaller than in June and three metros still managed an annual gain: Calgary (3.3%), Halifax (2.1%), and Quebec City (1.1%).
“After a cumulative decline of 8.6% since peaking in April 2022, recent rises in the composite index have erased a part of this correction, which now stands at just 3.8%,” the report states, adding that: “Prices could continue to rise in the third quarter, supported by strong demographic growth and the lack of supply of properties on the market.”
Market headwinds?
Investors cannot afford to be complacent though as the HPI report notes that things could change later in the year as affordability and interest rates bite.
Meanwhile, Desjardins’ principal economist Marc Desormeaux highlighted the rise in listings over recent months.
“We won’t know for a few months whether that reflects investors timing the market or mortgage holders trying to wash their hands of higher debt servicing costs,” he wrote in a client note. “Yet the 21% Canada‑wide jump in listings that began in April is the fastest three‑month rise ever recorded outside the pandemic, suggesting a shift in market sentiment.”
