Canadian home prices continued to rise in August, and real estate data firm Teranet says the increase was once again driven by hot markets in BC and Ontario.
Teranet tracks home prices in Canada using its Teranet-National Bank National Composite House Price Index, and this month’s update shows that the index rose 1.5 per cent from July to August — that’s the third-largest August increase since the index was started in 1999. The index was also up 11.4 per cent year-over year, the most it’s risen in 12 months since July 2010.
The index measures home price changes by tracking the observed or registered home prices of properties that have been sold at least twice. To increase accuracy, Teranet excludes certain properties from its calculations, such as those that members of the same family have sold to one another, and those that have a high turnover rate.
On a year-over-year basis, Vancouver had easily the largest home price increase at 25.8 per cent. That’s the largest jump ever for the area, and the 20th month in a row that prices have risen in the city. Victoria followed in second place with a year-over-year increase of 17.5 per cent, and Toronto and Hamilton were next at 14.6 and 13 per cent, respectively.
Home price stats look different month-over-month, with Toronto leading the way with a 2.8 per cent increase, Victoria at 2.2 per cent, Hamilton at 2 per cent and Vancouver fourth with a gain of 1.7 per cent. Of the 11 metropolitan markets surveyed by Teranet, those four were the only ones to see home price rises above the national uptick of 1.5 per cent.
Notably, the Toronto index was above 200 for the first time in August, which means that home prices in the city have more than doubled since June 2005. Teranet also points out that Toronto home prices have seen a “marked acceleration” in the last three months in particular, with monthly price gains in that period averaging 3.1 per cent.
Commenting on the divergence in Vancouver and Toronto home prices from July to August, National Bank Financial’s Marc Pinsonneault said in a note that he believes the stage is now set for “a moderate price correction in Vancouver.”
Paul Ashworth of Capital Economics also said he sees Vancouver home prices falling in the coming months, citing the recent decline in home sales in the city. “There has always been a considerable lag between shifts in home sales and prices. The fall in Vancouver-area home sales this year will trigger a slowdown in the rate of house price growth to single digits by early next year,” he said in his own note.
