Teranet: Canadian home prices post smallest increase since 2009

The April 2013 numbers just released by the Teranet-National Bank National Composite House Price Index strongly recall those posted the previous month, save for one big difference.

For the 12-month period ending in April, Canadian house prices rose by 2 per cent. Though that isn’t a huge drop from the 2.6 per cent increase we reported for the period ending in March 2013, the new April numbers represent the smallest 12-month rise since November 2009.

Once more, the story south of the border is markedly different. The Case-Shiller home price index of 20 U.S. metropolitan markets posted a significant 9.3 per cent rise from a year earlier in February (the latest available reading).

Across Canada, the values differ from market to market.

Here’s how the metro markets fared:

The year-over-year numbers

  • Seven of the cities studied posted gains higher than the national average, the same amount that posted higher-than-average increases last March.
  • Once again, Quebec City led the pack, this time posting a 6.1 per cent increase over the last 12-months, followed by Calgary (5.5 per cent), Hamilton (5.4 per cent), Winnipeg (4.4 per cent), Toronto (4.3 per cent), Edmonton (3.6 per cent) and Halifax (2.8 per cent).
  • Though prices were below the average gains in Ottawa-Gatineau and Montreal, they still saw small prices increases of 1.5 per cent and 1.3 per cent respectively.
  • British Columbia fared less well: in the year-period ending in April, Victoria prices dropped by 3.3 per cent and Vancouver saw its ninth straight month of 12-month deflation, decreasing by 1.5 per cent.

The month-to-month stats

  • The composite index was up only 0.2 per cent from March.
  • Despite the promise of a revived spring market, it was the weakest April for monthly change in the last 15 years since the index started, excluding April 2009, when the country was in recession.
  • However, three markets saw higher increases than the national average: Winnipeg (1.3 per cent), Edmonton (1.3 per cent) and Calgary (1.2 per cent).
  • The majority of cities saw month-to-moth prices flatline in April: Hamilton (0.6 per cent), Montreal (0.5 per cent) and Toronto (0.4 per cent).
  • Prices dropped from the previous month in five markets: Vancouver (0.8 per cent), Quebec City (0.5 per cent), Ottawa-Gatineau (0.2 per cent) and Victoria and Halifax (0.1 per cent).

Check out the charts below for more details…

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Toronto real estate: Condo rents hit record high as would-be homebuyers stay on sidelines

Condo leasing up 31 per cent in wake of tighter mortgage lending rules, new study finds.

Would-be first-time homebuyers are fuelling such unprecedented demand for rental condos across the GTA, they’ve helped push average rents to a record $1,856 per month, says a new report by condo research firm Urbanation.

Since mortgage lending rules were tightened last July, pushing many first-time buyers to the sidelines, demand for rental condos has skyrocketed, says the report released Tuesday.

The number of condos leased via the MLS jumped 31 per cent in the first quarter of 2013 over the same period a year earlier.

Rents have climbed 10 per cent just in the last two years, the report notes, after a decade of largely flat or minimal increases.

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“For the first time in a long time, we’re seeing rent levels grow stronger than resale and new condo prices,” says Shaun Hildebrand, senior vice president of Urbanation and a former market analyst with the Canada Mortgage and Housing Corporation, who has watched the rental market closely for years.

“What we’re seeing is investors who are recognizing that the real strength in the market is on the rental side right now, not the resale side.”

Units listed for rent on the MLS grew 19 per cent in the first quarter, year over year, as investors opted to rent rather than sell units into a market where sales have seen double-digit declines and prices have flattened since last summer, according to Urbanation.

That high rental demand has had the unintended effect of helping stabilize a condo market that many housing watchers, including Finance Minister Jim Flaherty, feared was a bubble about to burst.

Flaherty told The Canadian Press Tuesday that he believes tighter lending rules imposed by Ottawa, including limiting amortizations to 25 rather than 30 years, are at least partly responsible for the “healthy” slowdown in the housing market and the fact house prices haven’t collapsed as some had anticipated.

Flaherty said he’s been happy to see a slowdown in the condo market in big urban centres, “moderation” in new home construction and lower demand for mortgages.

House prices are usually the last thing to slip in a housing slowdown, and Tuesday the latest Teranet housing report showed home prices up just two per cent in April, compared to 2.6 per cent in March.

“I’m happy with where we are,” Flaherty told The Canadian Press in a telephone interview from France, where he announced funding for a new Vimy Ridge visitor’s centre.

Flaherty added that he has no plans to further intervene in the mortgage market, after tightening up lending rules four times in as many years.

Rent increases are expected to stabilize, but not likely fall, as more first-time buyers save up bigger down payments and move into the resale market, says Hildebrand. The addition of tens of thousands of new condo units slated to come onstream over the next three years should also ease competition for rental condos, especially in the downtown core, where the vacancy rate now hovers at just one per cent, he noted.

The fact that rents have now reached record levels — with the average index rent now about $2.33 per square foot — means more would-be buyers are realizing it’s starting to make more financial sense to buy than to rent.

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Up by 5.6 per cent, Toronto condos drive price growth in April

Toronto might not be seeing the same record sales and meteoric price growth it experienced in recent years, but the month of April saw plenty of promise.

According to new stats released by the Toronto Real Estate Board (TREB), sales have dropped slightly since the same time last year, but prices have held steady, or in the case of condos in the 416, seen a sizeable bump.

In April 2013, TREB counted 9,811 sales throughout the GTA, a 2 per cent drop from 10,021 transactions the same time last year. The average selling price for April 2013 was $526,335 – up by two per cent from April 2012. The MLS® HPI Composite Benchmark Price was up by 2.9 per cent.

For Toronto-proper, prices were up regardless of property type. Condos in the city led growth, their prices rising to $379,266 for a 5.6 per cent boost since the year before. Detached houses followed with a 2.5 per cent increase since April 2012, rising to an average price of $852,090.

Sales of condos did dwindle slightly. They were down by 1.3 per cent in the 416 since April 2012. However, they saw the lowest drop in sales compared to other property types such as detached homes, which saw sales fall by 11.8 per cent year-over-year.

“The improved condo sales picture, with Toronto sales down by only one per cent compared to last year, suggests that interest in condo ownership may be improving,” said Jason Mercer, TREB’s Senior Manager of Market Analysis, in the news release.

However, condos didn’t fare as well in the 905 where sales dropped by 7.3 per cent and prices dropped by 5.9 per cent to $273,832. Semi-detached properties, however, were up by 2.2 per cent year-over-year to $410,739 in the suburbs and sales were up by 1.3 per cent.

Listings were up compared to April 2012. Across the GTA, the number of properties on the market rose from 16,470 to 18,270 for a 10.9 per cent increase.

For more details check out the tables below…

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