The MLS® Home Price Index1, the leading measure of Canadian home prices, continued rising in February 2012, according to statistics released today by The Canadian Real Estate Association (CREA). Year-over-year comparisons continued shrinking, providing further evidence that Canadian home price growth may be topping out.
The MLS® Home Price Index in February 2012 was up 5.1 per cent from levels in February 2011. The increase was the smallest since last June, and marked the fourth consecutive month in which gains slowed.
“MLS® HPI trends for February show that home price growth is generally slowing,” said Gary Morse, CREA President. “At the same time, price gains and trends differ among housing markets tracked by the index. Since all real estate is local, buyers and sellers should talk to their local REALTOR® to best understand how home price trends are shaping up where they live.”
The MLS® HPI remained above its year-ago level in all five of the markets tracked, led by Toronto (7.3 per cent). It also remains above year-ago levels in all housing categories tracked, led by two-storey single family homes (6.9%).
The MLS® Home Price Index rose 1.1 per cent in February 2012 as compared to January.
“The index typically rises in February from the previous month as demand ramps up leading into the spring housing market,” said Gregory Klump, CREA’s Chief Economist. “The monthly price increase in February this year was less than what we saw in either of the past two years, which is more evidence that the trend for Canadian home prices is slowing.”
Among housing categories tracked by the index, single family homes posted the biggest month-over-month gains in most markets, particularly in Toronto where they are in short supply relative to strong demand.
In focus: the condo apartment market
Interest in the market for condo apartment units has increased recently, particularly Toronto’s condo market. With Toronto’s year-over-year increase in the MLS® HPI for apartment units (4%) having surpassed gains in other major Canadian condo markets in February 2012, it is likely that Toronto’s condo market will remain of particular interest.
The MLS® HPI shows that price gains are decelerating for condos in Toronto. In other markets, year-over-year price gains for condo apartment units are near the overall rate of consumer price inflation. This suggests that the condo market is not overheating.
A number of new condominium apartment projects have been completed in the GTA over the past year. Some of these new units have been listed for sale, resulting in a better supplied market. The number of months of inventory for condo units in the GTA on the Toronto Real Estate Board’s MLS® System is running close to its long term average. This suggests the GTA condo market is balanced, which is consistent with moderate price growth.
The number of condo developments slated for completion annually is unlikely to result in a glut of supply relative to demand and consequent price correction. Barring an unexpected spike in interest rates, economic downturn or overly restrictive further changes to mortgage regulations, the condominium apartment market is likely to remain balanced for the foreseeable future.