OTTAWA, June 22, 2012 /CNW/ - According to statistics released today by
The Canadian Real Estate Association (CREA), the MLS® Home Price Index,
the leading measure of Canadian home prices, increased in May 2012.
The Aggregate Composite MLS® Home Price Index rose 5.2% on a year-over-year basis in May 2012.
Prices rose further in all five markets and in every Benchmark home
category tracked by the index.
Price increases were biggest in Greater Toronto (7.9%), followed by
Calgary (4.8%), Greater Vancouver (3.3%), the Fraser Valley (2.4%), and
One-and two-storey single family homes continued to post the biggest
year-over-year gains (5.8% and 6.7% respectively), followed by
townhouse units (3.3%) and apartment units (2.9%).
The MLS® Home Price Index (MLS® HPI) rose 5.2 per cent from April to May
2012. Year-over-year gains had been slowing through the end of last
year and have stabilized at close to five per cent so far this year.
The MLS® HPI posted the largest year-over-year increase in Greater
Toronto (7.9%), followed by Calgary (4.8%), Greater Vancouver (3.3%),
the Fraser Valley (2.4%), and Montreal (2.2%).
Year-over-year price gains again picked up speed in Calgary, with May
marking the largest year-over-year gain there in nearly two years. The
increase lifted the MLS® HPI for Calgary to its highest level since
By contrast, year-over-year gains continued to shrink in Greater
Vancouver and the Fraser Valley. Price gains in Greater Toronto and
Montreal held their ground in May compared to April. Greater Toronto
also remains the hottest market tracked by the index, with single
family homes in its urban core continuing to sell briskly.
"While price gains overall are running steady, diverging trends among
local markets show clearly that all real estate is truly local," said
Wayne Moen, CREA President. "Because price trends are different between
markets and within them, anyone buying or selling a home should consult
with their REALTOR® to best understand how the housing market is
shaping up locally."
Among the Benchmark housing types tracked by the index, two-storey
single family homes continued posting the strongest year-over-year
growth in May (6.7%). Gains for one-storey single family homes (5.8%)
also surpassed the rise in the overall index, while townhouses and
apartments saw more modest gains (3.3% and 2.95 respectively).
"Home price gains in Greater Toronto continue to eclipse those in other
markets. Gains are also starting to pick up speed in Calgary after
months of stability," said Gregory Klump, CREA's Chief Economist. "As
always, prospects for home price trends depend on buyers' willingness
to pay and sellers' expectations and motivations, both of which are
tied to economic, labour market, and interest rate prospects. With
European sovereign debt and banking issues likely to cloud the global
economic outlook, Canadian interest rates will remain at or very near
current levels. The continuation of low interest rates will continue to
support Canadian housing activity and prices for some time to come."
In focus: The MLS® HPI and Canadian home price valuations
The MLS® HPI outperforms other measures of Canadian home prices,
including other popular home price indices, medians, and averages.
While the MLS® HPI is highly correlated with other price measures, it
enjoys a number of advantages. Among these advantages is that it takes
into account contributions that a home's quantitative and qualitative
features make toward its sales price, including whether or not a home
has been renovated. This is an important consideration given the
significance of Canadian home renovation expenditure each year.
Unlike average and median prices, the MLS® HPI is not distorted up or
down by changes in the mix of sales. Consider the period from
pre-recession peak until the present for the MLS® HPI as compared to
the average price for the aggregate of the same five markets.
The MLS® HPI fell 8.4 per cent from its pre-recession peak to the bottom
of its recessionary trough. The average price, by comparison, dropped
14.2 per cent. From the trough reached more than three years ago, the
MLS® HPI has since climbed 23.7 per cent, while the average price has
climbed by almost double that (40.2 per cent) due in large part to
compositional factors in Vancouver and Toronto.
From a starting point of January 2005, average and median prices fell
further during the recession and have since then climbed by more than
the MLS® HPI.
This is important, since the ratio of price to income now compared to
its long-term average is often used to gauge the extent to which
Canadian homes may be considered as overvalued. Inferences made using
this ratio based on distorted average price data may be tenuous.
For additional information, including interactive tables, please go to: www.homepriceindex.ca.
MLS® is a co-operative marketing system used only by Canada's real
estate Boards to ensure maximum exposure of properties listed for sale.
The Canadian Real Estate Association (CREA) is one of Canada's largest
single-industry trade associations, representing more than 104,000
REALTORS® working through more than 100 real estate Boards and
Further statistical information can be found at http://crea.ca/statistics.
SOURCE Canadian Real Estate Association
For further information:
Pierre Leduc, Media Relations
The Canadian Real Estate Association
Tel.: 613-237-7111 or 613-884-1460
Email - email@example.com