The Teranet National Bank house price index shows that home prices in Canada rose for the 15th straight month in a row in April, which once again hit its highest level ever. Just three cities are responsible for this record breaking data: Toronto, Hamilton and Victoria.
The index is all about tracking repeat sales of single-family homes over time. It found Toronto leading the way with the price index rising 2.6 per cent in April. The city has seen prices jump 7.3 per cent the start of the year, and 26.3 per cent in the past 12 months.
Hamilton saw its price index rise 2 per cent in April and 23 per cent over the past year.
Vancouver is now showing signs of slowing. The price index fell 0.1 per cent in April, and compared to a year ago, prices are up 9.7 per cent, slower than the national average of 13.4 per cent.
According to many market experts, the Vancouver’s foreign buyer tax has pushed buyers to other cities, including Victoria, where the price index rose 1.5 per cent in April and 19 per cent over the past year.
“Based on the cool down in home sales that began early last year, we expect the Vancouver growth rate to fall much lower over the next few months”, wrote David Madani, senior Canada economist at Capital Economics. But Madani expects Toronto to experience the same as he noted that the city saw a sudden 30 per cent spike in new home listings in April.
“That’s further evidence that the surge in house price inflation is close to a peak and will drop back sharply before the end of this year”, he wrote in a client note.
The senior economist of National Bank, Marc Pinsonnault said he doesn’t see much of a slowdown in prices ahead, even with the new housing rules Ontario announced last month.
“The effect of the 15 per cent tax on foreign home buyers and home price growth will be assessed over the next few months” Pinsonnault wrote in a client note.
“But even if this measure cubs speculation, it should not bring home price growth to a halt due to strong fundamentals such as job creation, immigrants from other countries and lately a net flow of migrants from other provinces. Low interest rates also contribute to the housing boom”.