Canada

Canadian Condo Prices Are Rising and Falling Faster Than Houses

Canadian real estate prices are moving higher, but not all markets are equal. Statistics Canada (Stat Can) updated the Residential property price index (RPPI), showing prices increased in six major markets. Breaking those numbers down, the biggest lift to the index is condo apartment resales. Meanwhile, new condo construction is seeing prices fall.

Residential Property Price Index (RPPI)

The residential property price index (RPPI) is Stat Can’s quarterly price analysis. The index tracks 6 significant markets – Montreal, Ottawa, Toronto, Calgary, Vancouver, and Victoria. Typical stuff when you gloss over it, but there’s one important distinction – it includes resales and new construction. By using a consistent methodology across construction types, we can finally compare how both markets are doing.

Canadian Real Estate Prices Are Rising

Overall, the RPPI printed higher prices across markets. The aggregate of residential prices increased 0.6% in Q4 2019, when compared to the previous quarter. Prices are up 1.6% for the quarter, when compared to the same time last year. Like other price indexes, it’s showing bigger growth in the Eastern half of Canada, and weakness in Western Canada. Ottawa is leading higher overall, and Vancouver is leading lower.

Canadian Home Prices Q4 2019

The annual change in home prices (all types) for selected Canadian real estate markets, seperated by construction.

Source: Stat Can, Better Dwelling.

Breaking the market into new resales and new builds, we can see this increase is entirely due to resales. Resale homes increased 0.86% in the same quarter, and are now up 2.03% from last year. New homes fell 0.19% in Q4 2019, and are now down 0.77% from last year. The increase is being largely propelled by rising condo resale prices.

Canadian Resale House Prices Are Rising, While New Construction Falls

Resale house prices are rising, while new house prices have been weak. Overall, house prices in the six cities tracked increased 0.49% in Q4 2019, and are up 0.69% compared to a year before. Resale prices increased 0.68% in the quarter, and are up 1.38% from a year before. New homes were virtually flat in the quarter, and are down 0.79% from a year before. The index increase is entirely boosted by rising resale prices.

Canadian House Prices Q4 2019

The annual change in house prices for selected Canadian real estate markets, seperated by construction.

Source: SC, Better Dwelling.

Canadian Resale Condo Prices Are Soaring, While New Construction Drops

Condo prices are rising faster than house prices, but are seeing the same issues with new builds. Overall, condo prices were up 0.54% in Q4 2019, and are up 1.91% from a year before. Resale homes were up 1.4% on the quarter, and a whopping 3.68% from a year before. New homes weren’t as lucky, with prices falling 0.84% in the quarter, bringing them down 0.93% from a year before. Condo prices are rising faster than the general market, but new builds are falling faster.

Canadian Condo Prices Q4 2019

The annual change in condo prices for selected Canadian real estate markets, seperated by construction.

Source: SC, Better Dwelling.

Canadian real estate prices are still rising, with condo apartments driving the market. Only condo resales, however. Prices for new construction are falling, which is actually weighing the index down. It also appears Vancouver, the most expensive and one of the largest condo markets, is largely responsible for the decline.

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17 Comments

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  • Mortgage Guy 3 weeks ago

    New condos are essentially a futures market for condo prices. If they’re dropping, it means speculators (more than 50% of the market) is being careful here.

    • LT 3 weeks ago

      Why though? Everything is bullish for this setup.

      * large immigration
      * falling interest rates
      * low unemployment
      * high paying job creation
      * government secured financing

      Interesting they wouldn’t see all of this as a prime setup.

      • RainCityRyan 3 weeks ago

        These points do not universally apply to all of the markets.
        For example, do we see high paying job creation and large immigration in Calgary?
        Also, price matters, even with the current correction Vancouver prices will drag on these.

  • CJRay 3 weeks ago

    LT;
    Are you a RE agent?

    * Immigration has not gone up that much as a percentage of population in the last 20 years. In fact, Canada’s immigrant population has risen from 20.6 percent to 21.9 percent since 2011; not huge.
    * Interest rates fell, then increased, and now stabilized. They likely won’t go lower as there isn’t much downward potential
    * Unemployment in Canada has increased since a year ago.
    * High paying job creation? Where??
    * Government secured financing? Really??

    • alvi 3 weeks ago

      Eureka :Tech sectors in BC and Ontario are booming.Shopify going to hire a 1,000 more workers in Vancover.
      Now if energy could rebound a little then Canada will be firing on cylinders

      Go Canada Go-Keep up the great work canada and special thanks to the newly arrived immigrants for ignoring the naysayers and economic nihilist and growing the private sector- we need your energy!

      In Summary:
      Yes: entrepreneurship, more immigrants ,lower taxes, efficient and effective public administration
      No:to higher taxes(including on real estate) ,bloated bureacracies and bigger deficiits.

      • SH 3 weeks ago

        Nice of you to cheer on the wage suppression of Canadians.

        And if you hate bloated government bureaucracy I presume you’d be on board with abolishing the CMHC and removing the taxpayer backstop to the real estate industry?

    • SH 3 weeks ago

      * Immigration has not gone up that much as a percentage of population in the last 20 years. In fact, Canada’s immigrant population has risen from 20.6 percent to 21.9 percent since 2011; not huge.

      Yes it most certainly IS huge when you take in that percetange YEAR after YEAR after YEAR after YEAR for decades. Do you not understand the concept of a tipping point? Just because we were able to absord such massive numbers in the past doesn’t mean that, at some point, such an onslaught won’t impact housing, infrastructure, and society as a whole. How can you not see how cramming 100,000 new immigrants per year, year after year after year with no end in sight, into the GTA at the height of a housing crisis won’t make said housing crisis worse?

      And besides which, the official immigration stats don’t include illegal immigration, which has skyrocketed under Trudeau, asylum seekers, also up huge, and foreign students, whose numbers have ALSO skyrocketed as universities cash in on the higher fees. The result is more displaced Canadians, more wage suppression, and worsening of the housing crisis. Immigration isn’t the only culprit but it is surely in the top 2 or 3.

  • M. 3 weeks ago

    Makes sense. Condos bought before the boom in 2015-2017 in Metro Vancouver were much, much cheaper (because prices were going up so fast); new condos are having to price in the insane land value increases that were happening before/during construction. Folks with resales can see a decent profit on their purchase price while undercutting new product.

    Total reverse of the situation about a decade ago, when prices were relatively flat, but there was lots and lots of new condos and townhouses being finished. You couldn’t sell an older condo unless you slashed the price pretty far, at least in suburban Metro Vancouver.

  • alvi 3 weeks ago

    Some people moving from condos to single detached for 2020-2021?

    • Lois T 3 weeks ago

      I can see why. My husband and I sold property three years ago and now rent and have money invested. We will buy again in the future with a mortgage, but looking at the condo market, every unit is disaster waiting to unfold, whether it is special charges or exorbitant insurance rates (recently). It is difficult for the average person to understand the future financial implications of buying any single unit. We will buy a detached with some updating necessary.

  • Holton 3 weeks ago

    We all know what needs to be done here.

    1.Implement speculator tax on all none primary residential real estate.
    2.Implement foreigner tax on non Canadian citizen s or PR owning residential real estate in Toronto or Vancouver will be taxed. That includes foreign students on student via
    3. Implement corporate speculation tax where incorporated entities hold residential real estate.

    This will both increase our tax revenue and lower housing prices.
    The government is creating the biggest bubble in Canadian history. This will be a liberal political lagacey.

    • MP 3 weeks ago

      Why do you push so hard for more taxes? Especially when these exact taxes clearly did not work in curbing BCs affordability issue.

      If home prices are put back in to CPI affordability issues will correct themselves and people will have a stronger pension (as inflation will be higher and thus pension pay outs).

      • SH 3 weeks ago

        They did help to stabilize Vancouver’s market and yes, all housing classes are down from their peaks. Still ridiculously overpriced, but it’s better than it was.

        And besides, the taxes were more a way to ensure satellite families and foreigners who evade income tax to actually contribute the society in which they have chosen to invest (or launder money, whatever).

        I would prefer a complete ban on foreign buying of homes in Canada. Citizens or pemanent residents only. Canadian homes for Canadians.

        • MP 3 weeks ago

          The below link provides benchmark home pricing for Vancouver. The empty home tax (as I understand) was introduced in January of 2017. 2017 did not see a stabilization or reduction from peak it saw a rebound to peak.

          B20 guidelines have helped to stabilize the market (January 2018), not taxes. Thats because it makes money harder to borrow. The guidelines would not be necessary if home prices were in CPI and caused an increase to inflation (and thus interest rates).

          https://www.mortgagesandbox.com/vancouver-real-estate-forecast

  • Grim Reaper 3 weeks ago

    Canadian real estate will be infected by the corona virus causing a decline in prices.

    • internet genius 3 weeks ago

      grim Reaper, you could just as easily say real estate prices will go up because people are trying to leave China…

  • Blue light 3 weeks ago

    The prices will not drop. The plan is to enslave people totally. I am sorry if majority can’t accept reality but we are all slaves to the banks ; try to miss one payment and you are on the street . With such high mortgage payments , do you have an opportunity to take time off, travel, and enjoy life. For example, if you are in your early 30thies and buy the cheapest condo in Toronto (around 500k) with 5% downpayment and interest rate around 3%., what is your monthly payment? how much do you owe after 5 years? is there any chance that you will repay it until you are senior ready for retirement considering other necessities for the basic survival such as food and clothes . Unfortunately, the gap between rich and poor will extend further.

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