National HPI dragged in June even with the seasonal boost

Home price growth stuttered in June with only a 0.8% rise in the Teranet–National Bank National Composite House Price Index.

The June reading was 224.96, up 0.51% year-over-year. The index reflects percentage increases from a base value of 100 in June 2005 and the current index value means prices are up 224.96% since then. 

Over the past 21 years, the index has seen an average 1.2% rise for June and it was only the seasonal pressure that gave last month’s index an increase at all; otherwise it would have declined 0.4%.

The index has only gained by an average 0.5% in the past year, the smallest gain since 2009 and below inflation. With the May and June figures relying on the seasonal advantage, it calls recovery of home prices into question.

However, the weakness is patchy with the national HPI was dragged down by 12-month home price declines in Western Canada metropolitan areas (Vancouver, Calgary, Edmonton, and Winnipeg) and a tiny increase in Victoria.

The unadjusted index was impacted by declines of 0.3% in the Vancouver market and 0.1% in Calgary and by a flat month for Edmonton.

Conversely, in the central and eastern markets things are stronger.

Rises were small in the indexes for Winnipeg (0.1%) and Quebec City (0.3%) but there were larger gains for Montreal (0.8%), Toronto (1.3%), Halifax (1.5%), Hamilton (1.6%), Victoria (2.1%) and Ottawa-Gatineau (2.2%).

The analysis accompanying the index notes that this is consistent with home resale markets and with this improving in the largest metros in the West, there is expectation that home price deflation will be limited there.

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