Canadian real estate investors finding comfort in the fact home prices didn’t fall much during the Financial Crisis, might want to look away. Land registry giant Teranet released its House Price Index for September, and it shows a sharp drop in home prices. The index, made in partnership with National Bank of Canada (NBF) is tied for the sharpest drop in the history of the index. Economists at the bank warned home prices are falling even faster than they did during the Great Recession.
Canadian Home Prices Fell At The Fastest Rate Ever
Canadian home prices took another sharp dive, according to the index. The seasonally adjusted composite index fell 2.0% in September, the same record-setting rate as a month before. Last month marked the fifth consecutive drop for home prices.
Canadian Home Prices Are Falling Faster Than They Did In 2008
National Bank emphasized that home prices are falling faster than they did during the Global Financial Crisis (GFC). Prices have dropped 7.0% since the May peak over the same period, and during the GFC they bottomed 9.2% lower. At the current rate of decline, a little over one more month can see prices beat the GFC decline.
Most Markets Are Seeing Home Prices Fall
The majority of markets (8 in 11) used in the composite index saw a drop in home prices. The biggest drops were in Victoria (-5.9%), Vancouver (-3.5%), Hamilton (-2.1%), Montreal (-1.9%), and Toronto (-1.8%).
Just three markets saw prices continue to climb, and they happen to be hot spots for young adults. Home prices in Calgary (+1.2%), Halifax (+1.1%), and Edmonton (+0.2%) continued to rise, despite tighter financing conditions. Prices were also much more reasonable in these regions, and the increases could be absorbed by a typical household. That wasn’t the case in many other cities, like Toronto and Vancouver.