The Canadian housing market continues to weaken, with the Teranet repeat sales index last night registering its sixth straight monthly decline, with prices falling by -0.2% nationally over February (see next chart).
Canadian house prices have now fallen by -1.8% since values peaked in August 2012, but remain 25% above their April 2009 low.
The correction has been particularly sharp in Canada’s third biggest city and bubbliest (and most supply-restricted) market – Vancouver – where prices have fallen by -4.4% since values peaked in June 2012; although they did manage to increase by 0.7% over February. By contrast, Canada’s two largest cities – Toronto and Montreal – have experienced milder corrections, with values falling by -1.8% and -2.1% respectively since peak, following -0.3% and -0.4% falls in February.
A report published earlier in the month by TD Economics showed just how expensive housing in Vancouver is and why it is most at risk of a severe housing correction. According to this report, Vancouver’s house price-to-income ratio is around twice the Canadian average, with Vancouver also experiencing the highest price volatility, most likely due to its highly restricted supply, due to both geographical constraints and restrictive planning (see here and here).
