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Weekly Economic Watch

Published 01/17/2017, 01:17 AM
Updated 05/14/2017, 06:45 AM

Canada – In December, the Teranet–National Bank National Composite House Price Index™ rose 0.3% from the month before on gains in 8 of the 11 regions covered. The monthly advance exceeded the average increase of 0.1% for December since the index’s inception in 1999. Prices were up in Toronto (+1.2%), Victoria (+1.2%), Quebec City (+0.6%), Calgary (+0.6%), Hamilton (+0.4%), Halifax (0.4%), Ottawa- Gatineau (+0.3%) and Edmonton (+0.1%). They were down in Montreal (-0.5%), Vancouver (-0.8%) and Winnipeg (-1.2%). On a y/y basis, the index sprang 12.3%, its largest 12-month movement since June 2010, driven by Toronto (+19.7%), Victoria (+17.7%), Hamilton (+17.5%) and Vancouver (+17.0%). The lift was much smaller from Ottawa-Gatineau (+3.6%), Winnipeg (+3.4%), Halifax (+1.5%), Montreal (+0.8%), Calgary (+0.6%) and Edmonton (+0.1%). Prices in Quebec City were down 0.7% from a year earlier.

National house price inflation has shed momentum in recent months as Vancouver continues to deflate. Canada’s priciest city recorded its third consecutive monthly retreat and more is to come. The price drop so far has been concentrated primarily in dwellings other than condos. This is consistent with the fact that house sales have been falling since peaking in February and that the decline has been concentrated mostly in the detached dwellings segment. Toronto, Hamilton and Victoria are the three regions still pulling the Composite Index upward month after month. Outside Vancouver and these three regions, house prices have been flat in the past six months.

Still in December, housing starts jumped 10.6% to 207K, well above the 190K expected by consensus. The result was attributable to higher urban starts (+11.8%) as rural starts were roughly level. The increase in urban areas was split between multis (+14%) and single-family homes (+8%). On a regional basis, urban starts were up sharply in Ontario (+37%) and Quebec (+12.5%) and registered a small progression in the Prairies (+1.5%). This more than offset decreases in British Columbia (-10%) and Atlantic Canada (-16%).

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