Canada's urban housing markets are deflating under the weight of higher interest rates and a mortgage stress test, with just two major metro areas — Halifax and Montreal — showing any price growth in February.
And only one of those — Montreal — has seen positive price growth over the past six months, according to data from the Teranet-National Bank House Price Index.
"But price weakness does not mean collapse," National Bank economist Marc Pinsonneault wrote in a client note Wednesday.
"In Toronto, Canada's most important real estate market, apartment prices have been up for 16 consecutive months, while prices of other types of dwellings declined only 1.2 per cent over the last six months."
Earlier on HuffPost: Toronto's long history of housing busts. Story continues below.
In Vancouver, "seasonally adjusted home sales stabilized in the beginning of the year, limiting the potential of further home price declines," Pinsonneault added.
Still, the historic weakness in Vancouver's home sales, coupled with rapidly rising sales in Montreal over the past few years, means Montreal has overtaken Vancouver as the country's second-largest housing market.
The dollar value of home sales in Montreal in February was $1.606 billion, up 10 per cent in a year, according to the city's real estate board. Meanwhile, Vancouver's market has shrunk by 40 per cent over the last year, to $1.423 billion in February, according to data released by the British Columbia Real Estate Association (BCREA) on Wednesday.
The Toronto area remains the country's largest market by far, with a sales volume of $3.921 billion in February, including Greater Toronto and the Greater Hamilton areas.
If house prices were more even across Canadian cities, Montreal — with its metro population of around 4 million — would always have had a larger housing market than Greater Vancouver, with a population of 2.5 million.
But given the much higher real estate prices in Vancouver, this is likely the first time in at least a decade that Montreal's market has been larger than Vancouver's.
Average house price in Vancouver falls by $122,000
However, Vancouver's high prices are now coming down. BCREA's data shows the average price of a house sold in Vancouver is back below the $1-million mark.
The average sale price in Greater Vancouver was $945,521 in February, down 11.5 per cent, or nearly $122,000, in a year.
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"Prospective homebuyers continue to be sidelined by the mortgage stress test," BCREA deputy chief economist Brendon Ogmundson said in a statement.
"As a consequence, and despite a strong B.C. labour market, sales remained slow in February."
With evidence of a slowdown in Canada's economy, expectations for further interest rate hikes at the Bank of Canada have all but disappeared, and markets are indicating that Canadian mortgage rates could actually come down in the coming months.
"Falling mortgage rates should provide some relief for homebuyers, providing a small boost to affordability heading into the spring," Ogmundson said.