Canada’s housing market continued to expand in July marking the eighth straight monthly price increase. According to the Teranet-National Bank House Price Index, across the country prices rose 1.3 percent for the month to reach a new high on the index.
The Teranet-National Bank House Index measures monthly price changes on single-family homes based on data from Vancouver, Calgary, Toronto, Ottawa, Montreal, and Halifax. Taking into consideration the latest property sales data from these six cities, the index calculates a composite index for each city, as well as for the entire country.
As has come to be expected, Vancouver and the surrounding suburbs head the list of most expensive home prices with an average price of nearly $780,000 as of August. However, it is interesting to note that for July, three other cities recorded a greater amount of change than Vancouver. Also, of the six cities included in the survey, only Halifax realized a decline in the average price:
| City | July Change |
| Calgary | +2.3% |
| Toronto | +1.7% |
| Ottawa | +1.0% |
| Vancouver | +0.9% |
| Montreal | +0.5% |
| Halifax | (-0.9%) |
| National Average | +1.3% |
Source: Teranet-National Bank Composite House Price Index
House Prices Increases Expected to Slow Next Year
While analysts predict Canadian house prices will continue to gain next year, a report released by ScotiaBank earlier this week said the rate of appreciation will be considerably slower than 2011. The reason – according to the bank – is the growing likelihood of a slowdown in the global economy.
The Canadian economy relies heavily on exports and is a leading distributor of oil and minerals, as well as manufactured goods including automobiles and heavy equipment. Over 70 percent of Canada’s exports find their way to the U.S. market and even a slight decline in U.S. demand can have a huge impact on Canada’s important export sector.
Recent indicators suggest the pace of growth is slowing in the U.S. and has raised cautionary flags on this side of the border. There is also the question of the Eurozone debt crisis and the uncertain impact a default by one or more of the sovereign countries struggling with massive debt loads could have on the global economic system.
It is this uncertainty that may have home buyers waiting on the sidelines to see how the next few months unfold before committing to a major purchase.