Canadian real estate prices are still fast-growing, but showing signs of cooling. The Teranet–National Bank of Canada House Price Index (TNHPI) hit a new record high in July. Annual growth for the index shows acceleration for every month for a whole year now. Signs of cooling exist though, including falling home sales and over half of the index cities underperforming.
Canadian Home Prices Have Seen Annual Growth Rise Almost 18%
The C11, an index of the country’s largest real estate markets, showed substantial gains. Prices increased 2.0% in July, and are 17.9% higher than the same month last year. It was the 12th consecutive acceleration for the index, and the largest on record. Momentum will carry the index in the short-term, but National Bank of Canada (NBC) observed cooling.
Teranet-National Bank of Canada House Price Index
The 12-month change in the indexed value of home prices in Canada’s 12 largest real estate markets.
Source: TN HPI; Better Dwelling.
Canadian Home Price Gains Shrunk and Sales Are Falling
The index showed price growth acceleration and home sales are both slowing. They note it was the second month to see monthly gains shrink, though they’re still very large. In regards to home sales volume, they also reported a similar situation to CREA — a drop in volume. Over the past few months, sales have tapered consistently, relieving pressure on inventory. NBC economist Daryl King said, “… [this] could mean a slowing of price rises in the coming months.”
Fewer Than Half of The Index Cities Outperformed For Growth
One interesting point to note here is the index was led by less than half the market in the C11. The cities that outperformed the national index were Halifax (33.4 %), Hamilton (30.1 %), Ottawa-Gatineau (28.9 %), Montreal (21.4 %), and Victoria (21.1 %). These are all relatively small, but high-growth markets — Montreal being an exception.
The other six markets underperformed the national index, and weighed it down. Toronto (17.4 %), Vancouver (17.1 %), Winnipeg (10.5 %), Quebec (10.3 %), Calgary (7.5 %), and Edmonton (6.5 %), came in under. Though Toronto and Vancouver were only slightly under those numbers.
The TNHPI uses registry data, producing the most accurate measure of growth. This does have one drawback though — it can produce a lag compared to the CREA index. The latter uses market data, but isn’t confirmed for a few months. Since CREA data is showing price growth deceleration, NBC seeing slower price growth coming isn’t totally out there. In fact, it might already be present.
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