TO mar­ket hits home price in­dex

Fall­ing home prices in Toronto im­pacted the price of homes across Canada

The Hamilton Spectator - - BUSINESS -

TORONTO — Fall­ing home 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 came as the in­dex for Toronto, Canada’s largest hous­ing mar­ket, fell 2.7 per cent on a month-over-month ba­sis. The price in­dex for Hamilton slipped 1.9 per cent.

“This drop is en­tirely con­sis­tent with the re­cent loos­en­ing of mar­ket con­di­tions in metropoli­tan Toronto,” Ter­anet said in a news re­lease. “The loos­en­ing has con­sisted of a shift from very tight to bal­anced. There­fore, cur­rent mar­ket con­di­tions are far from be­ing typ­i­cal of an eco­nomic re­ces­sion.”

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

“And 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 Madani, who has been long­time bear on the hous­ing mar­ket.

Home sales in Toronto have fallen since April when the On­tario 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 cost of new fixed rate mort­gages has also climbed in re­cent months as yields on the bond mar­ket have risen.

In ad­di­tion to Toronto and Hamilton, the price in­dex for Quebec City lost 2.3 per cent, while 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.

Toronto was up 18.0 per cent com­pared with Septem­ber 2016, while Hamilton gained 19.5 per cent and Vic­to­ria added 14.7 per cent.

THE CANA­DIAN PRESS FILE PHOTO

Home prices in Canada had their big­gest de­cline in seven years in Septem­ber.

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