The Canadian house price index recorded the largest decline in its history

The 2.4% decline in August is the largest since the index began in 1999

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Canada’s home price index posted the biggest drop in its history on Tuesday as higher borrowing rates hampered the country’s housing market.

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The Teranet-National Bank National Composite Home Price Index fell 2.4 percent from July to August, on an unrevised basis. This was the largest monthly decline recorded since the index began in 1999. On an adjusted basis, the index fell 2.1 percent on a monthly basis, which is also a record decline and the fourth decline in a row.

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Home prices fell in nine of the 11 metropolitan areas included in the index with the largest declines recorded in Hamilton, Ontario. (-5.4 percent), Ottawa Gatineau (-3.8 percent), Halifax (-3.6 percent) and Toronto (-3.5 percent).

Calgary and Edmonton bucked the trend with monthly gains of 1.3% and 2.8%, respectively.

For cities not included in the index, Teranet noted the largest price drops in St. John, NB (-7.8 percent), Brantford, Ont. (-7.7 percent), Barry, Ont. (-6.7 percent) and Kitchener (-6.2 percent). Lethbridge, like its Alberta brothers, rose 2.6 percent.

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Teranet’s reading echoes early data from other housing sources.

The Canadian Real Estate Association reported last week that the national median home price fell 3.9 percent in August last year to $637,673. Monthly, the national average price, which was heavily influenced by sales in Greater Vancouver and the Greater Toronto Area, rose to $7,702 during July.

Meanwhile, the MCI fell 1.6 percent month-over-month in August, not a historically small drop, but less than its June-July decline.

The Teranet-National Bank index is still higher than a year ago, up 8.9 percent in August – “the fourth consecutive month of lower growth than the previous month.”

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Price increases have been recorded in all 11 cities that follow. Home prices in Halifax rose 15.4 percent year over year, followed by Victoria, up 14.8 percent, and Calgary, up 13.6 percent.

The other 20 cities that Teranet tracks but are not included in the index also experienced year-on-year price increases.

The index includes the following cities: Calgary, Edmonton, Vancouver, Victoria, Winnipeg, Halifax, Hamilton, Ottawa, Gatineau, Toronto, Montreal, Quebec City.

With file from Shantaé Campbell, Financial Post

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