Michael Babad
Other
The Vancouver and Calgary housing markets are on fire in what a new report says is a more pronounced Canadian east-west divide.
Prices across the country rose 0.3 in February from January, and 5 per cent from a year earlier, according to the Teranet-National Bank house price index released today.
The pricey city of Vancouver set a record for the fourth consecutive month, while home prices in Calgary set a fresh high for the first time since September, 2007, according to the report.
Today’s reading may well get tongues wagging again over the Canadian housing market.
But, as The Globe and Mail’s Tara Perkins reports, some of the pessimists who have signalled a bubble may be using flawed measures.
According to today’s report, Canadian prices are again at a record, though only Vancouver and Calgary set new highs among the 11 cities measured, with prices up 7.7 per cent from a year earlier in the former, and 9.6 per cent in the latter.
Other gains:
- Toronto, up 6.1 per cent over the 12 months
- Edmonton, up 5.3 per cent
- Hamilton, up 5 per cent
- Winnipeg, up 3.5 per cent
- Montreal, up 1.9 per cent
Prices fell almost 5 per cent in Halifax, 0.6 per cent in the Ottawa area, 3.4 per cent in Victoria and 2 per cent in Quebec City.
Victoria is something of a special case, given that prices have declined for 12 months in a row, though they rose 0.9 per cent in February alone to end a string of erosion. For Quebec City, it was the first drop in 15 years.
Notable, too, is that February’s reading marked the first time since October, 2009, of “price deflation in at least four of the regions covered.”
Also notable is that the report cited how the “east-west dichotomy became more pronounced than ever” last month, with prices up in all of the five western markets measured, while Montreal stood alone in central and western Canada with an increase.
On a monthly basis, prices slipped 0.1 per cent in Toronto, 0.8 per cent in Ottawa, and 1.7 per cent in Quebec City and Halifax.
“The fact that the national housing market is not homogeneous is highlighted by the fact that the national composite index is at a record level while there is price deflation in four out of the 11 regions covered,” said economist Marc Pinsonneault of National Bank.
“The latter situation has not been seen since the aftermaths of the last recession, 4 ½ years ago,” he added.
Mr. Pinsonneault broke down those regions into three categories: Ontario and west, but for Victoria and Ottawa, with markets “either hot or balanced,” some areas east of Ontario where “markets are rather favourable to buyers,” and, third, Victoria, where “price deflation has prevailed for the last few years.”
Economists generally expect Canada’s housing market to cool, but in soft-landing fashion.
“Price increases are still outpacing income gains by a wide margin in many markets, a situation we deem unsustainable in the longer run,” economic analyst Sonny Scarfone of Toronto-Dominion Bank said of the Teranet-National report.
“A low supply of new listings remains a key contributor to upward pressures on real estate prices,” he added.
As well, he noted how headline numbers can skew results and hide divergence within a city.
“Indeed, larger real estate markets such as the Greater Vancouver and the Greater Toronto Area are made up of several different markets with varying fundamentals,” Mr. Scarfone said.
“For example, in Toronto, we still see robust price gains in single-detached homes and low-rise units, while the high-rise segment will increasingly be exposed to a rising level of supply. Accordingly, we expect a disproportionate amount of the cooling in home prices to stem from the condo market.”
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