House prices rose by a record 2.2 per cent across Canada last month compared to April, led by a 3.6-per-cent price increase in Toronto even as total sales fell during the month, Teranet reported Wednesday.
The Teranet-National Bank National Composite House Price Index recorded the largest May gain in its 19-year history, reaching another record high for the 16th consecutive month. Prices were up in May over April in all 11 major markets included in the index, led by a record 3.6-per-cent increase in Toronto, a 3.1-per-cent gain in Hamilton and a 2.5-per-cent increase in Victoria.
National prices were up 13.9 per cent over May last year, coming close to the record annual price gain of 14.1 per cent recorded in September, 2006. Prices were up a record 28.7 per cent in Toronto compared to May, 2016.
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The strong price increases paint a different picture of the Greater Toronto Area market than data released last week by the Toronto Real Estate Board, which said average prices fell 6 per cent in May compared with April in the GTA as new listings surged and the number of homes fell sharply.
National Bank economist Marc Pinsonneault said TREB's sales price averages cannot be compared to the index data. Price averages are skewed by changes in the composition of sales in any month, and Mr. Pinsonneault said there were probably proportionately fewer high-end homes sold in May than in April.
The Teranet-National Bank index measures changes in public land registry prices of single-family homes that have been sold at least twice on record. It is not subject to bias based on different types of housing sold in a period, Mr. Pinsonneault said.
TREB also reported on the value of its MLS Home Price Index in May, showing benchmark prices in the GTA increased 1.2 per cent in May compared to April.
Mr. Pinsonneault said the Teranet data suggests new housing measures introduced by the Ontario government in April may have dampened sales and boosted new listings, but the impact on home prices "remains to be seen."
Although Vancouver home prices rose 1.5 per cent in May over April, he said detached and attached home prices have fallen since the B.C. government introduced a foreign buyer's tax last August, but condominium prices were up 18 per cent in May compared to the same month last year. He said condo affordability in Vancouver "could soon become as bad as it was at the beginning of 2008."
"The dichotomy of the Canadian residential market is more obvious than ever," he said in a research report.
The strength of the Canadian market is clearly driven by Victoria, the GTA, Hamilton, and other regions in Ontario in the "Golden Horseshoe" area surrounding the GTA, he said, which all have double-digit year-over-year price gains.
Montreal and Quebec City also posted significant price gains in May, according to the index, with Montreal prices rising 1.07 per cent over April while Quebec City saw prices climb 1.9 per cent in May.
For the first time this month, Teranet also surveyed 15 additional markets not included in the national composite index total, including 12 located in Ontario. The data showed Sudbury was the only Ontario market not recording a gain in May, with prices falling 1.9 per cent over April.
Janet McFarland