While resale home prices across Canada gained momentum in March, industry analysts say the COVID-19 pandemic is likely to cause an abrupt shift as the lockdown carries on, with cooler activity and prices expected in every Canadian market – especially those in Eastern Canada – in the months to come.
On Monday, the latest Teranet-National Bank Composite House Price Index (HPI) was released, revealing the average house price in Canada increased by 0.6% for the month, and by 3.8% year-over-year.
According to the HPI, seven out of the 11 markets covered saw an increase in prices last month, including Ottawa-Gatineau (1.1%), Vancouver (1%), and Toronto (0.9%). Trailing the country-wide average were increases for Hamilton (0.4%), Quebec City (0.3%), Montreal (0.2%), and Halifax (0.1%).
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The HPI also showed that home prices were flat in Victoria in March, while the three Prairie cities, including Calgary (−0.1%), Edmonton (−0.6%), and Winnipeg (−0.8%), saw declines.
In turn, Teranet says it expects that prices are going to start to cool after real estate boards reported a “clear break” in activity during the second half of March due to the coronavirus outbreak.
The loss of momentum is expected to be most prevalent in the metropolitan markets located in central and eastern Canada and in cities like Toronto, Hamilton, Ottawa-Gatineau, Montreal, and Halifax), which so far have pulled the national HPI up.
Analysts from the creator of the index aren’t alone with their predictions. On Monday, Capital Economics said Canada’s house price inflation accelerated to a nearly two-year high in March, but given the disruption already caused by the coronavirus outbreak, prices are set to decrease in the coming months.
As a result, Capital Economics said it’s “pencilling in a relatively modest fall” in house prices of 5% in the coming few months.