Clients who are in the market for a new home might experience less sticker stock if they live in Western Canada, as the region continues to experience weakness in home prices.
Last month, home price indexes in Vancouver, Calgary and Edmonton, in particular, continued their downward trends (−0.3%, −0.5% and −0.8%, respectively), finds the Teranet–National Bank House Price Index. For Canada as a whole, the monthly price index dropped 0.1%, the fifth consecutive month without an increase.
It was also the fifth consecutive month without an increase in Edmonton, the sixth in Vancouver and the seventh in Calgary. Home prices have been trending downward in three of the past four years in the Albertan cities, while Vancouver is showing no growth for the first time in six years.
However, Vancouver’s housing market appears to be stabilizing after a few months of weakness, at least in part thanks to jobs.
“Solid labour markets in Greater Vancouver, where a near-record 72K jobs were added in the last six months, argue for a more stable listings-to-sales ratio and limited price deflation,” the report says.
An RBC housing report released last week noted that macroprudential measures adopted by the B.C. and municipal governments, in combination with higher interest rates and the mortgage stress test countrywide, kept many buyers out of play in Vancouver last year.
Into 2019, Vancouver’s demand-supply conditions “clearly favour buyers at this point, and prices are coming down more visibly,” the RBC report says. The bank doesn’t expect that to change soon, based on current market conditions—and that’s not necessarily a bad thing for the overall economy.
Lower prices in markets like Vancouver and Toronto help “alleviate severe affordability issues that currently represent a major source of vulnerability,” the report says. The bank’s bottom line is that the risk of a housing collapse is remote in both those cities given the strength of their economies.
For Canada as a whole, the monthly Teranet–National Bank price indexes in Victoria and Hamilton were flat, while monthly index increases were exhibited by Toronto, Quebec City, Montreal, Halifax and Winnipeg.
Year over year, the index rose 2.2% in January, while declining in Calgary and Edmonton and flatlining in Vancouver. The biggest year-over-year index increases were seen in Ottawa-Gatineau, Victoria and Hamilton.