Canadian home prices stabilized in the month of May, as the Teranet–National Bank Composite National House Price Index rose 1.0%.
The increase “confirmed the stabilization of home prices that took place since the end of last year,” following a correction in the second half of 2017, says National Bank senior economist Marc Pinsonneault, in a house price index report.
Potential condo buyers, however, might experience prices rising at a comparatively greater rate.
“It is true that this stabilization was accompanied by a shift of price momentum in favor of condos in Toronto and Vancouver,” says Pinsonneault. That’s not surprising, he adds, given high prices for other home types in those two cities, combined with rising rates and tighter mortgage qualifications.
And May’s stabilization didn’t result in an outright price decline for other home types in Toronto and Vancouver.
In other regions, Pinsonneault says that home prices have regained most of the ground lost in Q1—but that might not last.
“Given that interest rates are likely to continue to increase, a relapse of home prices over the next few quarters cannot be ruled out,” he says. “But their resilience so far suggests that price declines would then be limited in scope.”
On a year-over-year basis, the index rose 4.5%, the lowest reading since June 2015. While Vancouver and Victoria lifted the annual national average, the index for Toronto declined year over year for the first time since 2009.