Canadian real estate price growth is still slowing, according to land registry data. The Teranet–National Bank House Price Index (TNB HPI) show prices fell for the first time in March, outside of recession. The drop represents the sixth consecutive monthly decline for Canadian real estate markets.
Teranet-National Bank House Price Index (TNB HPI)
Regular readers can skip this, but for new readers here’s a little about today’s numbers. The Teranet-National Bank House Price Index (TNB HPI), is a partnership between private land registry behemoth Teranet, and National Bank of Canada. The index is similar to the CREA HPI, but the measurements are taken at different times. This can result in very different numbers.
The Teranet HPI and CREA HPI measure different data sets, at different times. The Teranet HPI measures at the land registry, meaning they only use completed sales. CREA HPI measures at the MLS, which uses the point of sale, typically before the transfer. In a normal market, there’s probably not much of a difference. The vast majority of real estate sales in major cities occur on the MLS. However, in a volatile market, sales fall through and more “private” transactions occur. The CREA HPI would fail to capture that subtlety, but the Teranet HPI would.
Neither is better or worse, but they are different. Homebuyers not running numbers and depending on their agent probably won’t care. If you’re looking at the numbers professionally or from a macro market perspective, you want to take a peak at both.
Canadian Real Estate Prices Fall A Sixth Month
The C11, an aggregate price index of Canada’s largest cities, show prices declined last month. Prices fell 0.31% in March, but remain 1.53% higher than last year. The index is now down 1.74% from the peak reached in September 2018. The monthly decline was a rare one – the first one for March outside of a recession.
Teranet-National Bank HPI C11 – Annual Change
Composite aggregate of home prices in Canada’s 11 largest cities.
Source: National Bank of Canada, Teranet, Better Dwelling.
The annual pace of growth continues to decelerate. The 1.53% gain year-over-year is the fourth consecutive month we’ve seen the deceleration. TNB HPI analysts also noted, this is the 6th month in a row prices declined month-over-month. Only one month since the Great Recession printed lower annual gains – August 2018.
Toronto Real Estate Price Are Down Over 4% From Peak
Toronto real estate prices printed a decline for the month as well. Toronto prices fell 0.29% in March, when compared to the month before. Prices are up 3.26% from last year, but still down 4.32% from the July 2017 peak. The annual pace of growth has decelerated for the past 3 consecutive months.
Toronto Real Estate Prices – Teranet-National Bank HPI
Annual percent change of real estate prices in Toronto.
Source: National Bank of Canada, Teranet, Better Dwelling.
Vancouver Real Estate Price Are Down Over 4% From Peak
Vancouver real estate is fairing a little worse than Toronto these days. Vancouver prices fell 0.46% in March, when compared to the month before. Prices are down 2.1% from last year, and down 4.31% from the July 2018 peak. This is the 11th consecutive month we’ve seen price deceleration on the annual pace of growth. It’s also the biggest annual decline since June 2013.
Vancouver Real Estate Prices – Teranet-National Bank HPI
Annual percent change of real estate prices in Vancouver.
Source: National Bank of Canada, Teranet, Better Dwelling.
Montreal Real Estate Prices Hit All-Time High
Montreal real estate prices bucked the trend, printing a new all-time high. Montreal prices increased 0.12% in March, when compared to a month before. Price are now up 5.46% from last year, and currently sit at a new all-time high. The annual pace of growth is far outperforming the national index. However, prices have underperformed the market by 20% since 2005. It’s less of a booming market, and more of one catching up.
Montreal Real Estate Prices – Teranet-National Bank HPI
Annual percent change of real estate prices in Montreal.
Source: National Bank of Canada, Teranet, Better Dwelling.
Canadian real estate markets are changing direction, after years of higher than normal growth. One notable exception is Montreal, but don’t mix that up with a price boom. The city has long underperformed the national market, and even did worse than suburbs like Hamilton.
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It’s funny to hear people complain about foreign investment in Montreal real estate, when prices are close to the most affordable in Canada. Increase of 5%? That’s outrageous!
And it’s the new money laundering city too !!
Incomes are very low and taxes are very high. It won’t take much rise to create a ruckus.
The mid rise stuff being built in the city is quite awesome though. There’s so much of it too. Toronto and Vancouver can only dream of the kind of housing available all over Montreal. I’ve been watching for seven years, its quite impressive. Every borough is chock full of it, from the oldest neighbourhoods to the newer ones.
Montreal might not be as bad as Toronto or Vancouver but its still a bigger bubble than san francisco: https://wolfstreet.com/2019/04/12/the-most-splendid-housing-bubbles-in-canada-deflate-march-update/
It’s difficult to pick a winner when it comes to the most useless Charts!
TREB’s benchmark prices scam or the TNB-HPI?
Agree !! I like psf stuff.
I prefer psf stuff
Hamilton? Suburb? Of what? Burlington? Come on, Daniel. That’s a slap in the face. Hamilton’s its own city. It’s not an outlying district of anywhere else. Nor do other cities ever want anything to do with Hamilton in the same sentence.
Saying Hamilton is a suburb of another city is like saying Vancouver’s a suburb… of Seattle, Victoria, or China.
“Toronto real estate prices printed a decline for the month as well. Toronto prices fell 0.29% in March, when compared to the month before. Prices are up 3.26% from last year, but still down 4.32% from the July 2017 peak. The annual pace of growth has decelerated for the past 3 consecutive months.”
When is the crash gonna happen? Waiting to get in!
It happens in a whiplash effect… where first you see volume drying up (happening for awhile now) and then generally a 12-24 month period where prices are flat or moving up/down in tiny increments while inventory builds up. We’re in the beginning of this stage now as inventory is building in most cities across the country. Once inventory hits a catalyst you begin to see price pressure and that’s when things pull back.
You really have to go look at the history of housing bubbles to see how things work in more detail than I’ve explained. Although do note that they generally do not deflate instantly unless there is a major catalyst, take a look at the early 90s and you’ll see that it took years for the full price correction. It’s hard to tell how this bubble will pop though as our debt situation and income ratios are so much worse than the 90s and we have a looming recession.
I wouldn’t put any faith in stats provided through Canadian Real Estate Association or any RE board.