From National Bank of Canada

Even though the resale housing market is showing its first signs of stabilization and the non-seasonally adjusted Teranet-National Bank Index has seen its first monthly increase in ten months, it is still too early to say that the real estate market in Canada is on the rise. In fact, once adjusted for seasonal effects, the composite index contracted by 0.8% during the month, as price growth is generally stronger in the spring with the start of the high season. It should also be noted that, on an annual basis, the index in March fell by 6.9% compared to March 2022 and thus equaled the record contraction recorded during the 2008-2009 financial crisis. With the Bank of Canada expected to keep its policy rate in restrictive territory for much of 2023 and mortgage rates remaining high, we believe that the impact on property prices should continue to be felt in the coming months. All in all, we anticipate that the price correction that currently stands at 8.8% could continue through the end of 2023 (-5% additional), but this assumes that policy rate hikes are over, and declines begin at the end of the year. Although corrections are observed in all markets covered by the index (except Sherbrooke), the CMAs that have experienced the largest price growth over the past two years are also those that have recorded the sharpest declines to date. Ontario and British Columbia thus appear to be more vulnerable, while the Prairie markets are less so, as affordability problems are less acute.

HIGHLIGHTS:

• The Teranet-National Bank Composite National House Price Index™ decreased 0.8% in March compared with the previous month and after adjusting for seasonal effects, the ninth consecutive monthly decline.
• After seasonal adjustment, 7 of the 11 markets in the composite index were down during the month: Victoria (-4.5%), Winnipeg (-2.4%), Toronto (-1.9%), Edmonton (-0.9%), Hamilton (-0 .1%) Conversely, prices increased during the month in Halifax (+2.3%), Montreal (+0.5%), Vancouver (+0.3%) and Calgary (+0.1%).
• From March 2022 to March 2023, the composite index decreased by 6.9%, matching the record annual decline observed during the 2008-2009 financial crisis. Price growth in Calgary (7.6%), Quebec City (4.1%) and Edmonton (2.2%) was more than offset by declines in Montreal (-0.8%), Ottawa-Gatineau (-4.7%), Halifax (-4.9%), Vancouver (-5.0%), Winnipeg (-6.3%), Victoria (-8.7%), Toronto (-12.1%) and Hamilton (-13.5%).

https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-teranet.pdf