Falling Toronto mar­ket sinks Ter­anet house-price in­dex

The Globe and Mail (Ottawa/Quebec Edition) - - REPORT ON BUSINESS -

Falling hous­ing prices in Toronto in Septem­ber dragged down the Ter­anet-Na­tional Bank na­tional com­pos­ite house-price in­dex as it posted its first monthly de­cline since Jan­uary, 2016.

The na­tional in­dex, which in­cludes 11 cities, fell 0.8 per cent com­pared with the pre­vi­ous month, the largest monthly de­cline since Septem­ber, 2010.

The move lower came as the in­dex for Toronto, Canada’s largest hous­ing mar­ket, fell 2.7 per cent on a month-over-month ba­sis.

David Madani, se­nior Canada econ­o­mist at Cap­i­tal Eco­nom­ics, said a sharper slow­down in price in­fla­tion in the com­ing months is un­avoid­able.

“With in­ter­est rates on the rise and mort­gage fi­nanc­ing rules likely to be tight­ened sig­nif­i­cantly later this year, the worst is still to come,” said Mr. Madani, who has been long-time bear on the hous­ing mar­ket.

Hous­ing sales in Toronto have fallen since April, when the On- tario gov­ern­ment moved to cool the hot hous­ing mar­ket with a pack­age of changes in­clud­ing the in­tro­duc­tion of a tax on for­eign buy­ers.

The Bank of Canada has also raised its key in­ter­est-rate tar­get twice this year, prompt­ing the big banks to raise their prime rates, push­ing the cost of vari­able-rate mort­gages higher. The costs of new fixed-rate mort­gages have also climbed in re­cent months, as yields on the bond mar­ket have risen.

In ad­di­tion to Toronto, the price in­dex for Que­bec City lost 2.3 per cent, while Hamil­ton slipped 1.9 per cent, Hal­i­fax dropped 0.4 per cent and Winnipeg lost 0.3 per cent.

The in­dex for Vic­to­ria was flat, while Vancouver in­creased 1.3 per cent, Calgary added 0.7 per cent, Montreal climbed 0.3 per cent, Ottawa-Gatineau gained 0.3 per cent and Ed­mon­ton edged up 0.2 per cent.

Com­pared with a year ago, the na­tional com­pos­ite house-price in­dex was up 11.4 per cent.

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