The Teranet-National Bank Composite Index fell for the fifth consecutive month in April, with property prices declining by 0.7% on a month-over-month basis, said National Bank of Canada on Tuesday.
This brought the cumulative price decline to 3.0% over the past five months and 4.5% over the past year, noted the bank. However, the price decline in April was less pronounced than the 1.0% drop recorded in March, as the resale housing market saw its first increase in transactions in six months.
Nevertheless, sales levels remain particularly low, with the ratio of transactions per household nationwide still 25% below its historical average, pointed out National Bank.
Affordability challenges also continue to weigh on property prices, as evidenced by the fact that the largest declines over the past year were recorded in the country's least affordable markets, while the strongest increases were observed in the most affordable cities, stated the bank.
Despite the recent uptick in transactions in the resale market, it is still too early to speak of a sustained recovery for the housing market, it added. Indeed, several factors continue to weigh on the residential sector, including demographic decline, a weak labor market since the start of the year, and trade and geopolitical uncertainty.
The conflict in the Middle East has indeed had repercussions on the Canadian housing market, with mortgage rates rising over the past two months as bond yields climbed due to rising inflation. In this context, National Bank expects prices to continue to decline in the coming months, primarily due to particularly loose market conditions in Ontario and British Columbia.