National Bank: Canadian Real Estate Price Deflation Hits With Smallest Rise In 10 Years

National Bank - Canadian Real Estate Price Deflation Hits With Smallest Rise In 10 Years

Canadian real estate price growth may not be what it appears to be, according to a Big Six bank. TeranetNational Bank of Canada House Price Index (TNB HPI) numbers show a prices increased in July. However, the growth rate is down to the lowest level since the Great Recession. The index authors also note price growth is entirely due to seasonal pressures.

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

The TNB HPI is a price index designed and run by property registry giant Teranet, and National Bank of Canada. The index is like the “benchmark” produced by your local real estate board, but uses land registry data. Local real estate boards use sales through the MLS, and work close to market. That results in two key differences – the quantity and quality of data.

The MLS doesn’t include all sales, and the benchmark can include sales that fall through. The TNB HPI uses all sales through the registry, which means every completed sale. That’s more data, and no false hits. Since most sales use the MLS with few cancellations, there’s only a small difference. However, that difference can be amplified in a fast moving market. Neither is better or worse, but the difference does exist. Your bank most likely uses both, so if you’re looking at the market from a macro perspective – both are helpful. If you’re just buying a home, local board reports are likely the biggest influence for your market.

Canadian Real Estate Prices Show Lowest Growth Since 2009

The C11, an index of Canada’s largest 11 markets, showed an increase from last year. The index increased 0.72% in July, compared to the month before. The index is now up 0.44% from last year, putting it at a new all-time high. The 12 month growth has been trending lower, and is now at the lowest it has been since 2009. Growth is still growth though.

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 growth is below normal, and due entirely to seasonal pressure. The 0.72% monthly growth in June is substantially below the 21-year average of 1%. NBC senior economist Marc Pinsonneault, in a note to clients, wrote “The fact that the national HPI registered gains over the last three months does not mean that the market has turned the corner.” When seasonal pressures are removed, the index shows declines for the past 3 months. Prices dropped 0.4% in May, 0.5% in June, and 0.1% most recently in July.

Greater Toronto Real Estate Prices Are Less Than 1% From Peak

The TNB HPI shows Toronto is quickly re-approaching the all-time high. Prices in Greater Toronto increased 1.26% in July, when compared to the month before. This represents a 3.24% increase compared to the same month last year, and prices are just 0.90% from the peak. Prices in Greater Toronto are now similar to what they were in September 2017.

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.

Greater Vancouver Real Estate Is The Worst Performing In Canada

Greater Vancouver real estate is leading the market lower, after pushing it for years. Prices dropped 1.04% in July, when compared to one month before. This represents a decline of 6.23% when compared to the same month last year. Since July 2018 was the peak, it’s also how much prices have fallen from peak. The market is now at the same price level experienced in September 2017.

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 All-Time High

Greater Montreal real estate prices reached a new all-time high. Prices increase 1.69% in July, when compared to the month before. This represents a 5.80% increase compared to the same month last year, and a new record for prices. The growth marks a new record for a 12-month increase over the history of the index. Also worth a mention is this market has been lagging national growth, and still hasn’t caught up. From June 2005, Greater Montreal prices are 24.92% below the C11.

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 Are Still Down From 2014

Greater Calgary real estate prices are still down from the peak reached over 4 years ago. Prices across the region increased 0.70% in July, when compared to the month before. This represents a 3.06% decline compared to the same month last year. Prices are now 6.43% down from the October 2014 peak. Cheap credit didn’t help prices in the region so much, as they helped to prevent them from falling.

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 are giving a somewhat mixed picture these days. Though there are a few common takeaways. Western Canadian real estate markets are soft right now. The biggest markets in Western Canada are all producing losses. This is dragging national price growth lower. The industry is celebrating gains, but as pointed out by NBC – price gains are unusually low.

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  • Yan 5 years ago

    Does anyone know what the difference between sales on Teranet and TREB were last year? Thanks if you do.

  • Travis Hunter 5 years ago

    If you’re a millennial, I don’t know why you’d chose to live in Canada. Let the boomers have it. Prices will fall, but you don’t want to wait around for it to happen.

    New York City has almost 8,000 homes for under $500k:

    Even so, NYC prices are falling.

    • Chuck 5 years ago

      If only it were as simple as picking up and leaving! I’d be out of here for the US so fast. When I was in New York 24 minutes outside of Grand Central terminal I decided to look at house prices and they were in the 300s. It isn’t like rent is a great option either. Low paying jobs, high taxes, ridiculous cost of living, bad weather, and almost no viable options as most of our cities are towns. Welcome to Canada!

      • Rob 5 years ago

        Depending on your skillset, it is. The US has generous work visas available for Canadians in business, tech, and academia. If you’re a professional, I have yet to hear of someone rejected from an interview for it.

        If your connection is family, then that’s different. But even so, it’s a better deal for me to take a higher paying NYC job with a cheaper apartment, and fly back every couple of weeks to see my friends and family.

        Canada (Toronto specifically) is very European in regards to the way the city values employers over employees. It’s immensely different once you leave the city, and find out employers are willing to bid for you, and housing is just a place to live in when everyone has something on the go.

      • Cal 5 years ago

        Chuck you are correct. At 60 years old, the biggest mistake I ever made, was not moving to the USA, when I was younger.
        Canada is a country for suckers

    • CanadaSucks 5 years ago

      Yes the cost of living in Canada (or inflation if you will) is out of control. I took the following comment from this video


      Elijah Crisostomo
      il y a 2 semaines
      Hi I’m from PH too. How’s your life after leaving Canada? I’m thinking leaving Canada too. I was never financially broke when I was in PH but now I’m living paycheck to paycheck here because my dad said “it’s for my future”. Future my ass

      • Markie Mark 5 years ago

        Ok. This guy films his as he is sitting in some parking lot in CANADA.

        Since you are an expert on why Canada sucks, can you please tell us how many immigrants actually stay vs those that leave?

        Also, can you tell us where you live?

    • Zenity 5 years ago

      My friend, the government don’t care.
      They are run by people who just want to see their property value go up using your hard earned dollar. You need to tell other people to speak up and demand what is taken from you. Your future, your dignity and your share of the pie.

    • BeeMojovevotivo 5 years ago

      Immigration has become stricter across the world, and the refugee crisis makes it worse for those who are of newcomer status to pack their bags and move somewhere else. Also, increasing numbers numbers of of European and Asian countries are hostile to foreigners.

      Toronto is a trap that one can’t even escape if they depart this physical plane…It’s hell!

  • Jin 5 years ago

    Teranet > CREA. Although my only issue is since it doesn’t break it down by segment in these reports, it’s hard to tell if the soft price declines are based on a rising floor of cheaper homes, or a rise in total market value.

  • Ed Kolopolous 5 years ago

    Canada’s manufacturing falling, with capacity utilization rates falling pretty much everywhere but – wait for it, aluminum and steel. Homebuilding still driving the economy, even while companies have one of the largest manufacturing gaps for July in years.

  • GB 5 years ago

    The classic soft landing continues – and with record low mortgage rates drifting lower. Should give support to the market.

    • John 5 years ago

      What do you mean ‘classic’ soft landing? Soft landing is a term meant to make you feel warm and cuddly but logically does not exist.

  • AC 5 years ago

    This morning I saw a detached home in NW Calgary for $399K built in post-2000 on Redfin.
    $400k was the psychological lower limit for a SDH in a typical 3BD home for this year.
    I expect to see more of the $3xx SDH units going into the year-end.
    No pipeline, less demand for jobs and mortgages.

  • Zenity 5 years ago

    Young people should be angry in Canada, our system is setup to transfer wealth from young people to boomers via high taxation to support ageing boomers. By the time young people get old the conservatives will cut all of that away. What’s left of your meager income they still tax very time you buy something. Now even a place to live is unobtainable for most young families to own. There is no dignity for young people anymore. We should learn from HongKong, if their protest can put the Chinese Government to work we should also have massive protests to fight for our future. Is a decent place to live for your family too much to ask?

    If you are sane and if you are not a coward you should do the right thing and speak out. Even skinny Asian kids have the balls to push back what are you afraid of? Time to organize, be a leader for your generation. Demand dignity for you and your family.

  • Jupiter 5 years ago

    HongKong riots coming to cities in Canada near you soon. Anyone who thinks the riots are about “democracy” knows nothing. That’s the political answer due to geopolitics. just google HongKong housing price and the average income of rioters. For a crappy 300 square feet apartment it costs 500k use. The average rioters earn about 1500 – 4000 use a month. Don’t tell me with these numbers it’s about “democracy” with these numbers are are talking about survival and dignity. We are heading that way soon, except we have tons of empty land and high taxation. We are looking at civil unrest very soon. We as Canadians have to make a choice, pop the bubble and bring true affordability or pay in many other ways. With these pressures something has to give. I suggest saving the young families they are Canada’s future economic engine. Housing is a necessity, places with housing bubble end up like shiit eventually. Pop it now before it gets even bigger. Tax all foreign ownership of residential property, tax all none primary residential properties in GTA. housing is not an investment, it’s a necessity.

  • Rana 5 years ago

    Re prices r going to skyrocket again

    • Jin 5 years ago

      It’s insightful comments like this that remind me how much I like the forum isn’t public. So are you a real estate agent or developer?

  • BobbieKinUSA 5 years ago

    you can buy a nice home for 350K USD 7 miles from the George Washington Bridge which is a major entry way into Manhattan and served by NYC Transit

    you can’t buy a nice house for that kind of money within 100 miles of Toronto

    • Jin 5 years ago

      Nope. Not even in rural Ontario these days. Of course, it’s not a bubble when half a million can’t buy you house anywhere in a province. haha.

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