Loss of price growth momentum over the next few months will be more apparent in the traditionally higher-performing regions of Canada, according to the latest edition of the Teranet–National Bank of Canada House Price Index (HPI).
“At the national level, resale home prices were still gaining momentum in March. But this is based on home sales reported in land registries,” Teranet said. “The most important real estate boards all mentioned a clear break of activity during the second half of March due to measures to contain propagation of COVID-19.”
The month-over-month declines of 14.3% in sales numbers and 12.5% in new listings as measured by the Canadian Real Estate Association (CREA) essentially confirmed this rapid downturn.
“This cooling of activity should soon be reflected on the house price indexes,” Teranet said. “We expect the loss of momentum to be more prevalent in the metropolitan markets located in central and eastern Canada (Toronto, Hamilton, Ottawa-Gatineau, Montreal and Halifax) which so far have pulled the national HPI up.”
CREA Senior Economist Shaun Cathcart said that the impact of the downturn will reverberate far beyond March.
“Numbers for March 2020 are a reflection of two very different realities, with most of the stronger sales and price growth recorded during the pre-COVID-19 reality which we are no longer in,” Cathcart said. “The numbers that matter most for understanding what follows are those from mid-March on, and things didn’t really start to ratchet down until week four. Preliminary data from the first week of April suggest both sales and new listings were only about half of what would be normal for that time of year.”