Canadian Real Estate Price Growth Shows Abrupt Deceleration As “Busy” Spring Starts

Canadian real estate price growth is running out of steam, falling from record highs. Canadian Real Estate Association (CREA) data shows home prices hit a record in March. However, most of that appears to be momentum, as the annual rate showed abrupt deceleration. Higher interest rates are cooling expectations, and we may now be past peak growth.

Canadian Real Estate Prices Hit A New Record

Canadian home prices climbed to a new record, but the pace was moderate compared to recent moves. The benchmark (“typical”) home reached $874,100 in March, up 1.0% ($9,000) for the month. Prices have now climbed 24.4% ($185,300) higher since last year. Keep in mind $9000 is a big increase, but it’s notably much slower than recent performance. Especially going into Spring when price growth usually accelerates, not slows.

Canadian Residential Real Estate Benchmark Price

The composite benchmark price of a home across Canada, in Canadian dollars.

Source: CREA; Better Dwelling.

Both the monthly and annual growth showed signs of moderation last month. March was the smallest increase since August 2021, and looked tiny beside the $30,400 jump in February. It’s worth remembering the context of last August. Home price growth had slowed before the election, and suddenly changed course after. A result of promises to increase demand and excessive use of quantitative ease (QE).

As for annual growth, a sharp deceleration in growth was noteworthy. Annual growth was 26.9% in March, but 29.1% in the prior month. The rate is the lowest seen since December, so the deceleration isn’t wasting time. This is still a very high rate of growth, but a 2.2 point deceleration is a fast one that can be a sign of more moderate growth in the future. The drop is actually so sharp it forms an angle on the chart, which is unusual to say the least.

Short-Term Indicators Show More Signs of Price Moderation

Analysts will often look at annualized growth to benchmark recent performance. This involves taking a short period of change and projecting it as though it were the whole year. Since recent months give fresher data, it acts as a leading indicator. Today we’ll be looking at the 3-month rate, which is the period preferred by orgs like the Bank of Canada (BoC). You might see a 4-month or 6-month period used elsewhere, but it’s the same concept. 

If the 3-month trend is surging higher, expect the 12-month to follow. If it falls sharply, expect things to slow down. If the 3-month trend line crosses over the 12-month trend, the movement towards growth or deceleration are often occurring faster. A shorter-term trend is basically pushing/dragging the longer-term trend around, as older and more stale data moves out of the period. Faster movements should follow more extreme gaps between the two indicators. 

Canadian Residential Real Estate Price Growth

The 3-month (annualized) and 12-month growth rate for the Canadian composite benchmark prices.

Source: CREA; Better Dwelling.

The annualized trend shows short-term growth is falling very quickly. The 3-month growth fell to 31% in March, a sharp decline from the 37% seen a month before. More important is it’s unusual for this trend to collapse going into the Spring market. It usually accelerates since this is traditionally the busy season. If it falls below the 12-month trend, it would need a big trend catalyst to get growth moving in the other direction. 

It’s easy to attribute the declaration in growth to higher interest rates, but that’s not directly the issue. It generally takes 18 to 24 months for higher rates to fully be realized in the market. The 0.25 point change in March is also tiny, with the big 0.5 point rate hike not hitting until April. While these have some immediate effect, most of it is likely psychological. Higher interest rates and inflation can break a speculative mindset very fast. A lot faster than rising interest rates can throttle credit.



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  • Alan 2 years ago

    Working for $2,500 a month and paying student loans (barely qualify for RAP),
    $1,600 rent
    While those born before 1980 are becoming richer.

    • Ron Bruce 2 years ago

      While those born before 1980 are becoming richer might be somewhat true for the minority. But in the majority of Cities, renters have been over 50% of the population. Few Renters are standing in line to buy property at these prices when paying rent is challenging. Canadian Real Estate Prices Are Growing Over 10x The Rate of Incomes. It begs the question as to where all this money is coming from since most workers haven’t worked in a position that provides an uninterruptible lifetime income. Competing on the global stage has had diminishing returns for Canadian industry and its employees.

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