Canadian home prices grew at the fastest pace since 1989

New residential housing prices in Canada grew at the fastest pace since 1989, as leveraged demand continued to clash with limited supply.

Statistics Canada's home price index, which measures the prices of new construction homes, grew by 12.17% in August. The last time the index grew at this pace was in August 1989, when year-over-year growth came in at 12.83%.

New home prices are now growing faster than any time between 2005 and 2007, the last period of strong price growth in Canada which led up to the housing bust during Great Financial Crisis.

Ottawa, the nation's capital, now leads all major cities across Canada in new home price growth. In August, growth came in at 27.49% year-over-year. This is by far the strong growth on record at Statistics Canada going back to 1982.

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EXISTING HOUSING PRICES GREW AT FASTEST PACE ON RECORD

Housing prices of existing homes (homes with at least two sales in its history) are also growing at the fastest pace on record. In August, existing housing prices were up 18.37% nationally.

Existing housing prices have grown faster than new housing prices, pushing Teranet's national index higher than the national index released by Statistics Canada.

Existing home prices have grown the most in the east coast city of Halifax, outpacing even Ottawa and Hamilton. In August, Halifax's existing home prices grew by 32.36%, down slightly from July when growth came in at 33.38%.

Home prices are up sharply all over the country largely due to the quantity of new money injected into housing markets by Canadian commercial banks. The total balance of domestic outstanding residential mortgages at Canadian banks in July 2021 was $1.41 trillion CAD, up from $1.22 trillion CAD in January 2020. But, new home price growth now appears to be slowing across the country.