12-Month Home Price Inflation at 1.9% In July

August 15, 2013

12-MONTH HOME PRICE INFLATION AT 1.9% IN JULY

The Teranet-National Bank National Composite House Price Index™ rose to an all-time high in July, as did the indexes of four of the 11 metropolitan markets covered by the composite index: Hamilton, Toronto, Ottawa-Gatineau and Quebec City. However, the composite index was up only 1.9% from a year earlier. Though this was a slight acceleration from June, the 12-month gains of these two months were the smallest since November 2009. By way of comparison, the Case-Shiller home price index of 20 U.S. metropolitan markets was up 12.1% from a year earlier in May (the latest available reading). In Canada, the price rise over the 12 months ending in July exceeded the cross-country average in six of the 11 markets: Hamilton (6.7%), Calgary (5.9%), Quebec City (3.8%), Edmonton (3.5%), Toronto (3.4%) and Winnipeg (3.2%). It lagged the average in Halifax (1.5%), Montreal (1.1%) and Ottawa-Gatineau (0.9%). Prices were down from a year earlier for a fifth straight month in Victoria (−4.0%) and for a 12th straight month in Vancouver (−2.0%).

The July composite index was up 0.7% from June. Though this increase may seem substantial, it is somewhat below the seasonal norm. Over the last 12 years, the average July gain has been 1.0%. (May, June and July are generally the months in which upward pressure on home prices is strongest. In 15 years of index data collection, the composite index has not declined in any of these three months.) In July of this year, prices were up from the month before in nine of the 11 markets surveyed. The increase exceeded the national average in four markets: Victoria (2.6%), Hamilton (1.8%), Toronto (1.3%) and Edmonton (0.8%). It lagged the average in Calgary (0.5%) and in Vancouver, Ottawa-Gatineau and Quebec City (0.3%). In Montreal prices were flat from the month before. In Winnipeg (−0.4%) and Halifax (−0.6%), prices were down on the month.

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 July

% change m/m

% change y/y

Calgary

170.12

0.5 %

5.9 %

Edmonton

173.78

0.8 %

3.5 %

Halifax

143.01

-0.6 %

1.5 %

Hamilton

145.58

1.8 %

6.7 %

Montreal

151.83

0.0 %

1.1 %

Ottawa

143.20

0.3 %

0.9 %

Quebec

179.70

0.3 %

3.8 %

Toronto

152.30

1.3 %

3.4 %

Vancouver

168.92

0.3 %

-2.0 %

Victoria

137.41

2.6 %

-4.0 %

Winnipeg

194.47

-0.4 %

3.2 %

National Composite 6

157.07

0.7 %

1.7 %

National Composite 11

158.16

0.7 %

1.9 %

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 of Canada

 

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

1 Value of Dwelling for the Owner-occupied Non-farm, Non-reserve Private Dwellings of Canada.