Canada

Canadian Real Estate Price Gains Decelerate, Vancouver Losses Get Larger

Canadian real estate prices broke a seven month losing streak last month. TeranetNational Bank of Canada House Price Index (TNB HPI) numbers show prices made a monthly increase in May. The increase broke a very long losing streak . However, National Bank warned it wasn’t the good news it may appear to be. May is typically the second largest monthly price increase of the year. This past May was the smallest gain outside of recession.

Teranet-National Bank of Canada House Price Index (TNB HPI)

Feel free to skip this if you’re a regular reader. For those that aren’t, the TNB HPI is an index to measure the movement of prices for a typical home. It’s a similar concept to the CREA HPI used by real estate boards, but can print a totally different trend. This can throw some people off, but the reason is pretty simple.

Real estate boards only use their own data, and measure at a different point. When boards release data, they use the agreed upon price point for analysis. This allows them to produce “faster” data, but it includes sales that fall through. The TNB HPI uses land registry data, which allows both non-MLS sales and only ones that close. CREAs HPI is prized for speed. The TNB HPI is prized for greater breadth and accuracy. Both have their place for analysis, but they’re different. Banks use both.

Prices Made The Smallest Increase Outside of Recession

The C11, a weighted price index of Canada’s 11 largest cities, advanced on both a monthly and annual basis. The index increased 0.47% in May, compared to one month before. This works out to a 0.69% increase compared to the same month last year. Prices are now down 1.31% from the peak reached on September 2018. On the upside, prices increased breaking a seven month streak of declines.

Teranet-National Bank HPI C11 (Annual Change)

The 12 month percent change of real estate prices in Canada’s 11 largest cities, according to the TNB HPI.

Source: National Bank of Canada, Teranet, Better Dwelling.

The rate of growth on the month and annually isn’t really positive news. The monthly increase is the smallest for the month of May in the index, outside of recession. Ditto on the annual increase. National Bank analysts noted “One should not rejoice about the first rise in home prices in seven months as May is historically the second strongest month of the year.”

Toronto Real Estate Prices Continue To Decelerate

Toronto real estate prices advanced last month, but continue to decelerate. Prices increased 0.67% in May, from the month before. That works out to a 2.63% increase compared to the same month last year. Prices are now down 3.42% from the peak reached in July 2017. May normally sees a monthly increase, and this was the smallest since 2001. The annual increase has only been lower two other times in the history of the index.

Toronto Real Estate Price Change

The 12 month percent change of real estate prices in Toronto, according to the TNB HPI.

Source: National Bank of Canada, Teranet, Better Dwelling.

Vancouver Real Estate Losses Get Larger

Vancouver real estate price decreases are getting larger by the month. The region saw prices decline 0.25% in May, from the month before. This works out to a decline of 4.05% compared to the same month last year. It’s also a 4.98% decline from peak pricing, which hit in July 2018. Like REBGV stats, the losses are larger for detached homes and smaller for condos.

Vancouver Real Estate Price Change

The 12 month percent change of real estate prices in Vancouver, according to the TNB HPI.

Source: National Bank of Canada, Teranet, Better Dwelling.

Montreal Real Estate Prices Reach A New Record High

Montreal real estate prices pushed to a new record high last month. Prices increased 0.50% in May, from the month before. This works out to an increase of 5.25% compared to the same month last year. At 5.25%, this is the largest 12 month gain for a May since 2011. It’s worth a mention that Montreal has seen considerably slower growth than the rest of Canada over the past few years. The “boom” is more like playing catch-up.

Montreal Real Estate Price Change

The 12 month percent change of real estate prices in Montreal, according to the TNB HPI.

Source: National Bank of Canada, Teranet, Better Dwelling.

Calgary Real Estate Prices Drop Over 3%

Calgary real estate prices made a monthly advance, but fell on an annual basis. Prices increased 0.32% in May from the month before. This represents a decline of 3.16% when compared to the same month last year. Prices are down 7.02% since hitting peak in October 2014 – almost 5 years ago. Worth noting a monthly increase for May is normal, but this is also the smallest since 2016.

Calgary Real Estate Price Change

The 12 month percent change of real estate prices in Calgary, according to the TNB HPI.

Source: National Bank of Canada, Teranet, Better Dwelling.

Canadian real estate prices finally made a monthly increase. However, the increase was unusually small, further indicating resistance to higher prices. Decelerating growth also continues in most markets.

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21 Comments

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  • Michael 6 months ago

    Finally, you’re covering Calgary again. Why don’t you cover Calgary on a weekly basis anymore?

    • Zoika 6 months ago

      Totally agree, great to see something other than Toronto/Vancouver/Montreal

  • Party on 6 months ago

    The borrowing and spending binge by Canadian households, businesses, and governments (all levels) continues unabated. Growing the debt in the economy significantly faster than the economy itself grows seems to have developed into a way of life in Canada.

    At the end of March, 2019 the total debt outstanding in Canada (bottom line of the Statistics Canada credit market summary data table) was $8.165 trillion. At the end of March, 2018 the total debt outstanding was $7.785 trillion. In the 1 year period from the end of March, 2018 to the end of March, 2019 it increased by $379.7 billion. This is an increase of 4.8%.

    Canadian total (household, business, and all levels of government) debt numbers as of the end of March, 2019

    https://owecanada.blogspot.com/2019/06/canadian-total-household-business-and.html

  • Chester Pape 6 months ago

    Garth Turner will smirk at this article, re-post it on his blog, and tell everyone that renting is better than owning, while buying another heritage property.

    • Mathmagician 6 months ago

      Prices go up sub-1%. Mortgage rate at 2.75%. Clearly, owning is better than renting. /s

      • Millennial Whinger 6 months ago

        Owning long term is always better than renting as you are paying off today’s price with future dollars.

        As you are all aware, the inflation mandate ensures future dollars are less valuable.

        The key is long term.

    • Pierre 6 months ago

      Yes and tell Millennials to quit whining and go live in Nunavut and yay for mass immigration and foreign money laundering! Apparently young Canadians are supposed to be content to hand over their cities wholesale to foreign nationals. Not sure why people think Garth is a bear. Maybe he used to be, but he now practically parrots the realtor line.

  • Grim Reaper 6 months ago

    Today’s Globe and Mail had an article about the increased Hong Kong residents’ interest in Vancouver and Toronto real estate. Many, 300,000, of them have Canadian passports and will be buying before mainland China takes over, sooner than later, to protect their money and themselves. They are exempt from the B.C. foreign buyer’s tax. That will drive up real estate prices.

    • MM 6 months ago

      Vancouver today politically is no better than HK even a bit. Crazy NDP dictatorship harassing rich people, who in sane mind would move their money there? The future of Venezuela is on horizon for BC.
      Toronto is good choice.

      • MKM 6 months ago

        Haha, MM you sound like a neo-liberal militant. BC’s NDP government is doing a commendable job to reverse much of the profound damage to our economy and society wrought by 16 years of Liberal incompetence, corruption and slavish embrace of corporate interests, foreign parasitization and criminal exploitation such as money laundering.

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