ALICE YU

From National Bank of Canada In September, the seasonally adjusted composite index fell by 2.0%, matching the previous months record decline and representing a fifth consecutive monthly contraction. Since its peak in May, the composite index (not seasonally adjusted) has already declined by 7.0%, whereas during the 2008 financial crisis, prices fell by only 6.2% over the same period and by 9.2% in total over eight months. In a context where monetary policy will continue to be tightened in the coming months, house prices should continue their contraction and exceed that experienced during the financial crisis of 2008. Indeed, we anticipate a record cumulative decline of about 15% nationally by the end of 2023, assuming a policy rate that tops out around 4.0% and a Bank of Canada that throws some weight behind lowering rates in the second half of 2023. Although corrections are observed in the vast majority of markets covered by the index, the CMAs that have experienced the most significant price growth over the past two years are also those that have experienced the most significant declines to date. As a result, the price correction is expected to be more significant in Ontario, British Columbia and the Maritimes, while it is expected to be less significant in the Prairies, which are favoured by a buoyant economic environment. HIGHLIGHTS: The Teranet-National Bank Composite National House Price Index decreased by 2.0% in September compared to the previous month and after seasonal adjustments. After adjusting for seasonal effects, 8 of the 11 markets in the composite index were down during the month: Victoria (-5.9%), Vancouver (-3.5%), Hamilton (-2.1%), Montreal (-1.9%), Toronto (-1.8%), Winnipeg (-1.7%), Ottawa-Gatineau (-1.0%), and Quebec City (-0.1%). Conversely, the Calgary (+1.2%), Halifax (+1.1%) and Edmonton (+0.2%) markets were still up. From September 2021 to September 2022, the composite index increased by 6.0%. This growth was driven by Halifax (16.4%), Calgary (14 .7%) and Montreal (10.5%). Growth was lower than average in Winnipeg (5.9%). Hamilton (5.6%), Edmonton (5.6%), Ottawa-Gatineau (5.0%), Victoria (4.7%), Toronto (4.5%) and Vancouver (3.9%). https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/economic-news-teranet.pdf

From National Bank of Canada On a seasonally adjusted basis, home sales fell 3.9% from August to September, bringing the level of sales 18.9% below its 10-year average. This was the seventh consecutive decline for this indicator, with sales down a cumulative 36.2% between February and September. Declines were observed in every province and in 60% of all local markets. We expect the current moderation in sales to continue going forward as the Bank of Canada continues to increase its overnight rate in restrictive territory. The rapid rise in interest rates by the central bank is certainly limiting the purchasing capacity of households while also having a psychological effect on some buyers who are waiting to see how high rates will stabilize before taking action. Rising interest rates and the slowdown in the market did not provoke an influx of sellers for the moment. On the contrary, new listings declined 0.8% between August and September, a third monthly drawback in a row. Overall, the number of months of inventory rose from 3.5 to 3.7 months in September, the highest level since May 2020. Based on the active-listings-to-sales ratio, market conditions loosened in the country and are still indicating a balanced market. Six provinces out of 10 are now in balanced territory: B.C., Alberto, Saskatchewan, Manitoba, Ontario and P.E.. The others continued to indicate market conditions favourable to sellers mainly due to lack of supply. On a year-over-year basis, home sales were down 32.2% compared to the second-strongest month of September in history last year. Sales were down in every province on a year-over-year basis, with the largest decline observed in B.C. (-45.2%) and the smallest in Saskatchewan (-7.3%). For the first three quarters of 2022, cumulative sales were down 21.9% compared to the same period in 2021. https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/economic-news-resale-market.pdf