The Teranet–National Bank National Composite House Price Index TM rose 2.6% in June, the largest increase for that month in the index’s 19-year history. The table below breaks it down metropolitan areas:
Year over year, the national index up a record 14.2%. The hottest markets are Toronto (+29.3%—a record), Hamilton (+25.6%—also a record) and Victoria (+17.4%).
The June stats show that the Ontario government’s Fair Housing Plan intends to put a damper on Toronto house prices. Real new residential construction expenses and housing starts had not yet had a bearing in this regard. Given the plan’s effect on home sales and listings, the impact on prices should be felt soon enough.
The implications of these trends impact the net worth of approximately 75% of Canadian households. Residential real estate as an asset class is often the largest holdings within their overall net worth.
First Interest Rate Increase In Seven Years
The Bank of Canada (BoC) hiked its policy rate for the first time in seven years, raising the overnight rate 25 basis points to 0.75%. The BoC acknowledged that inflation remains low. The latest reading showed common core Consumer Price Index (CPI) rising only 1.3% on an annual basis. CPI weakness is considered “temporary”. National Bank Financial Economics continues to project inflation close to 2% by the middle of 2018.
Positive Economic Growth for Canada
This increase couples today’s forecast from the Conference Board of Canada (CBoC) anticipating an increase in GDP (Gross Domestic Product) growth in Canada from July 2017 forward. Housing is a key driver. The CBoC expects the Canadian economy to grow by 2.6% this year, before slowing to 1.9% in 2018. Enjoy the complete Economic Report and Forecast from our partners at National Bank Financial Here.