Housing prices rise month over month for the first time in 10 months

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Millicent Wong
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financial post

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The cost of Canadian housing could finally be rising again

Released April 20, 2023 • 3 minutes read

Canadian home prices rose 0.5 percent in March from February. Canadian home prices rose 0.5 percent in March from February. Photo by Brian Thompson/Postmedia/File Photo

The cost of Canadian housing may finally be on the rise again, according to the latest results from a long-running index, but the economist who compiled the report thinks it’s too early to say.

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House prices rose 0.5 percent in March from February, the first monthly rise for the index in 10 months, according to Teranet-National Bank’s composite house price index released on April 20.

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The index reflects the average price of homes sold at least twice in 11 major metropolitan areas: Calgary, Edmonton, Vancouver, Victoria, Winnipeg, Halifax, Hamilton, Ottawa-Gatineau, Toronto, Montreal and Quebec City.

Daren King, an economist at the National Bank of Canada who compiled the Teranet report, said most of March’s surge could be attributed to the traditionally strong nature of the spring housing market, when most homes in Canada are sold .

“It’s the big season (for real estate). That explains most of it,” he said. “I think we’ll have to wait until after spring to assess if there’s a recovery in the housing market.”

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Housing authorities have touted monthly price and sales gains as a sign of a possible revival in the sector.

Earlier this month, the Aggregate Composite MLS Home Price Index rose 0.2 percent in March from the previous month, according to an April 14 report by the Canadian Real Estate Association (CREA). CREA said this was the first increase since February 2022.

And prices in Toronto rose more than 1 percent in March from February, the Toronto Regional Real Estate Board said when it released data on April 5.

But once seasonally adjusted, the Teranet National Bank Index fell 0.8 percent in March from February.

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Seasonally adjusted prices fell in seven of the 11 cities, led by Victoria’s 4.5 percent drop. Winnipeg fell 2.4 percent, Toronto 1.9 percent, Edmonton 0.9 percent and Hamilton, Quebec City and Ottawa-Gatineau all fell 0.1 percent

Cities bucking this trend include Halifax, up 2.3 percent, Montreal (0.5 percent), Vancouver (0.3 percent) and Calgary (0.1 percent).

Spring fever aside, King said a small number of new listings could also impact pricing in March.

“That’s definitely a factor. The (seasonally adjusted) drop would probably be larger than it is now,” he said. “For the rest of the year, the price decline will be smaller than we expect.”

On an annualized basis, the Teranet Index fell 6.9 percent in March from the same time last year, “slightly worse than the previous record decline recorded during the 2008-2009 financial crisis,” Teranet-National Bank said.

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Prices fell the most in Hamilton (13.5 percent), Toronto (12.1 percent) and Victoria (8.7 percent). Home prices rose in three cities, with Calgary up 7.6 percent, followed by Quebec City (4.1 percent) and Edmonton (2.2 percent).

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Teranet also tracks price changes for 20 other cities not included in the index. Among these cities, the largest year-over-year price declines were in Oshawa, Ontario, with a decline of 19.3 percent, Abbotsford-Mission, BC, with a decline of 17.7 percent, and Peterborough, Ontario, with a decline of 17. 2 percent and recorded in Guelph, Ontario. Ontario, up 15.8 percent.

Seven cities posted gains, led by Trois-Rivières, Que., up 18.8 percent, and Sherbrooke, Que., up 12.4 percent.

“I don’t think the market will go back to more normal transactions with interest rates that high,” King said. “I think it’ll be a story for 2024 when we expect the Bank of Canada to cut interest rates.”

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