Canada

Canadian Real Estate Prices Jump Another $17,000 and Growth Is Accelerating

Canadian home prices are soaring as easy credit continues to drive excess demand. The Canadian Real Estate Association (CREA) data shows real estate prices ripped higher in December. Prices are now showing the fastest annual growth ever, with few signs of slowing down. The recent acceleration in price growth shows the annual rate may rise even further.

Canadian Home Prices Increased Another $16,700 Last Month

Canadian home prices are rising at one of the fastest rates ever. The composite benchmark (a.k.a. a typical home) reached $798,200 in December, up 2.1% ($16,700) from the previous month. Compared to last year, prices are now 26.6% ($167,500) higher. This is an astronomical amount of growth, there’s no other way to put it.  

Canadian Real Estate Benchmark Price

The composite benchmark price of a typical home across Canada.

Source: Statistics Canada; Better Dwelling.

Canadian Real Estate Prices Have Never Grown Faster

The annual rate of growth for a benchmark home across Canada has never been higher. It hit 26.6% in December, up 1.3 points from the month before. Back in June 2021, annual growth tapered until August. Post-election, it accelerated to this all-time record pace of growth. The trend doesn’t appear to be tiring either, but actually accelerating into last month. 

Canadian Real Estate Benchmark Price Growth

Annual growth for the composite benchmark price for a typical home across Canada.

Source: Statistics Canada; Better Dwelling.

Canadian Home Prices Are Likely To See More Short-Term Growth

Annualizing short-periods of data is one way analysts benchmark growth rates. It involves measuring a short-period, and projecting it as though it were the whole year. You can then compare it against the 12-month (annual) growth, to see if it’s speeding up or slowing down. Today we’re going to be using a 3-month annualized period, which is common at the Bank of Canada (BoC).

The 3-month (annualized) rate of growth cleared the 12-month trend for the first time in six months. The 3-month rate hit 27.8% in December, 1.3 points above the 12-month rate. It was the first time since June 2021 that the 3-month accelerated at a faster pace, than the 12-month. Failing an abrupt and sharp downward pressure, annual growth is likely to continue rising. That means last month is unlikely to remain the record. 

Canadian real estate prices soared last month and are now accelerating even faster. Easy money is boosting demand significantly above usual, leading to a tight market. Homebuyers no longer see risk, since the government has backstopped the market. But seriously, why would you think otherwise when the government says a 10% drop in price is unacceptable, but says nothing when they see a 30% increase?

9 Comments

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  • Tiff Macklem 4 months ago

    This seems like it will end really well for everyone, and have no collateral damage or knock-on effects.

    Massive, systemic inequality always balances itself, just like budgets and supply chains.

    I’ve never been more optimistic about Canada.

  • Bob 4 months ago

    Wow, at this rate houses will soon be worth more that 17th century
    Dutch tulip bulb!

  • alex 4 months ago

    “Failing an abrupt and sharp downward pressure” Like a series of rate hikes and liquidity being sapped from the market in tandem with fiscal support being withdrawn as well?

    • Charlie Lee 4 months ago

      I believe they’re hinting the central bank would ease on rate hikes if homeowners are too upset. Remember, this isn’t about what most Canadians want. It’s about what the 1 in 5 Canadians that elected this government want.

      • SH 4 months ago

        And based on a recent Ekos, Liberal popularity is surging among Canadians 65+. Boomers are by far the most loyal Liberals. Pretty obvious why this government serves their interests alone and are content to have the young sleep in the streets.

  • Jappan Singh 4 months ago

    At this rate of growth, How many years will it take for Average Canadian Home Owner to become a billionaire just on the home equity itself?

  • C.Rose 4 months ago

    As a stock / futures market trader for over forty years… the last move in a bubble is a accelerating parabolic move with everyone believing that this is the new normal. What usually pricks the bubble is central banks tightening the supply of money ( rising interest rates )… it works every single time if the central bankers are committed . We’ll see if they are.

  • Ron Bruce 4 months ago

    It looks like foreign money sees the advantages in buying real estate – no money laundering investigations other than one overworked Commission in BC and weak government controls when Banks would sooner move money and take part in the action. The Fractional Reserve Banking Model in Canada means the bank can lend out 90%, or $90, and must keep 10%, or $10, on reserve. Hence, $90 dollars of every $100 dollars can be created out of thin air. The real owners of real estate are the mortgage lenders, who can seize property on default of the borrower. Therefore any increase in property value benefits both the lender and the property owner (not to mention the City tax department, realtor, lawyers, accountants). The real estate investor can borrow more money and the lender just follows the 10% rule. Seems like a never ending verticle spiral. Please forward any corrections to this formula.

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