National Bank of Canada: GTA home price index could drop by 7-10% over next few months
OTTAWA - Canadian home prices rose two per cent in July from the month before as prices in Toronto continued to climb, though there were signs parts of the city's market were starting to cool, data showed on Monday.
The Teranet-National Bank Composite House Price Index, which measures changes for repeat sales of single-family homes, also showed prices were up 14.2 per cent from a year ago.
Toronto helped drive the national monthly increase with prices up 2.1 per cent. Still, the report noted there were signs of weakness creeping into the market, with prices for dwellings other than condos down 1.6 per cent on a non-smoothed basis.
“In our forecast, we think that the GTA home price index could drop by seven to 10 per cent over the next few months – a reflection of the new policies put in place, but also higher mortgage that rates we’ve seen rising in the past few weeks,” Stefane Marion, chief economist and strategist at National Bank of Canada, told BNN in an interview Monday.
This abrupt reversal was consistent with the recent decline in home sales in Toronto, the report said. Sales in Canada's largest city have fallen since the provincial government imposed a number of measures to rein in the market, including a foreign buyers tax.
In Vancouver, where the British Columbia government imposed its own foreign buyers tax last August, prices were up 2.8 per cent, marking a fresh peak.
Activity cooled in the country's most expensive housing market after the tax was put in place, but prices have since recovered.
Teranet takes a three-month rolling average of prices to produce its index in order to even out month-to-month fluctuations.