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Canada: Record annual price decline in March
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
Slight increase in sales for a second consecutive month
From National Bank of Canada
Summary
On a seasonally adjusted basis, home sales increased 1.4% from February to March, the first time since February 2022 that they experienced two consecutive monthly increases. Unlike the previous month, the increase in sales was not spread across all provinces.
On the supply side, new listings dropped by 5.8% in the month, a seventh decrease in nine months.
Still, we continue to see that there is a high proportion of sellers who are changing their minds, as we estimate that 19% of listings have been withdrawn in the last three months.
Overall, supply decreased in Canada as testified by the number of months of inventory (active-listings to sales) decreasing from 4.1 to 4.9 in March. This remains up from the trough of 1.7 reached in the pandemic but remains low on a historical basis.
The active-listings to sales ratio is still tighter than its historical average in the majority of Canadian provinces, with only Manitoba indicating a ratio above average.
Housing starts in Canada decreased in March (-27.1K to 213.9K, seasonally adjusted and annualized), which was below consensus expectations calling for a 237.5K print. This drop almost fully erased Februarys 27.9K gain. In urban areas, decreases in housing starts were seen in Ontario (-20.7K to 75.4K), the Prairies (-8.0K to 35.9K), Quebec (-11.8K to 27.0K) and the Maritimes (-0.3K to 6.3K). Starts in BC (+13.6K to 48.0K), meanwhile, increased after reaching their lowest level since March 2022 in February, thanks to a gain in multiples (+14.1K to 43.2K) while single units starts were essentially steady (-0.5K to 4.8K).
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%).
https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-resale-market.pdf
Canada: Slight increase in sales for a second consecutive month
From National Bank of Canada
On a seasonally adjusted basis, home sales increased 1.4% from February to March, the first time since February 2022 that they experienced two consecutive monthly increases. Unlike the previous month, the increase in sales was not spread across all provinces. In fact, this growth is largely explained by a notable jump of 10.0% in sales in B.C. and to a lesser extent by increases in Manitoba (1.2%), Ontario (1.1%) and Quebec (0.8%). Despite signs of stabilization, the level of sales in Canada remains very low on a historical basis and has declined by 39.5% since the start of the monetary tightening. As we expect the Bank of Canada to keep its policy rate at its current restrictive level for most of 2023, the outlook for a recovery in the housing market remains limited. As a result, sales are expected to remain below their historical average in the coming months and it is still too early to interpret recent increases in sales as a rebound in the housing Market.
On the supply side, new listings dropped by 5.8% in the month, a seventh decrease in nine months. Still, we continue to see that there is a high proportion of sellers who are changing their minds, as we estimate that 19% of listings have been withdrawn in the last three months. Overall, supply decreased in Canada as testified by the number of months of inventory (active-listings to sales) decreasing from 4.1 to 4.9 in March. This remains up from the trough of 1.7 reached in the pandemic but remains low on a historical basis. As a result, the active-listings to sales ratio is still tighter than its historical average in the majority of Canadian provinces, with only Manitoba indicating a ratio above average.
On a year-over-year basis, home sales were down 34.4% compared to the second-strongest month of March in history last year. Sales were down in every province on a year-over-year basis, with the largest decline observed in Alberta (-41.3%) and the smallest in Saskatchewan (-20.2%). For the first quarter of 2023, cumulative sales were down 37.0% compared to the same period last year.
https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-resale-canada.pdf