Teranet: Canadian Real Estate Prices See Third Consecutive Monthly Decline

Canadian real estate prices saw weakness in the second half. The TeranetNational Bank of Canada House Price Index (Teranet HPI) shows more than half of major urban markets saw declines in December. Two of the largest, Toronto and Vancouver, were just off of all-time highs, but yet to print a correction. Meanwhile, Montreal has hit a new all-time high.

The Teranet HPI

The Teranet HPI is a home price index that captures the price movement in home resales. It’s run as a partnership between Teranet, the country’s largest land registry operator, and National Bank of Canada. The index isn’t all that popular in the news or with your real estate agent, but it’s used by most major banks. It’s kind of like the CREA HPI, but they do sometimes show different price movements.

The difference is largely due to the time of measurement. The CREA HPI is only MLS transactions, so there’s less data and the inclusion of sales that may fall through. The tradeoff is people consider it “faster,” since you have sales that closed the month before. The Teranet HPI uses land registry data, so you’re getting off MLS sales and only sales that close. Since transfers happen ~90 days after the sales, some people consider it slow. They’re both worth taking a look at, especially in a volatile market though.

Canadian Real Estate Prices Are Down Less Than A Point From Peak

Canadian real estate prices are up on an annual basis, but are down from peak. The Composite 11, an aggregate of the 11 largest markets, fell 0.3% in December. Prices are up 2.51% from last year, but still down 0.95% from the peak hit in September 2018. The gain is due to not falling as quickly as last year, as opposed to stronger second half gains. Speaking of that…

Teranet-National Bank HPI C11 (Annual Change)

Composite aggregate of home prices in Canada’s 11 largest cities.

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

Analysts from the firm noted “weakness” in most markets, starting in the second half of the year. This is the 3rd consecutive monthly decline, with declines in 7 of 11 major markets. “The recent trend of home prices is clearly downward in most metropolitans markets, added NBC senior economist Marc Pinnosault.

Toronto Real Estate Prices Are Down Almost 4% From Peak

Toronto real estate prices are still in downtrend, even after a December gain. Prices made a 0.17% increase in December, and are now up 3.72% from last year. Prices are still down 3.95% from the peak obtained in July 2017, and are down 0.21% from the 2018 high printed in August. For the finance crowd, it appears to be printing lower highs.

Toronto Real Estate Prices (Teranet-National Bank HPI)

Annual percent change of real estate prices in Toronto.

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

Vancouver Real Estate Prices Are Down Almost 3% From Peak

Vancouver real estate prices are just off of peak, but seeing gains taper quickly. Prices fell 1.18% in December, but were still up 1.41% from last year. Prices are now down 2.95% from the peak, established in July 2018. Vancouver’s second half weakness was also apparent in the local board’s numbers as well.

Vancouver Real Estate Prices (Teranet-National Bank HPI)

Annual percent change of real estate prices in Vancouver.

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

Montreal Real Estate Prices Hit A New All-Time High

The Montreal real estate market bucked the trend, printing a new all-time high. Prices increased 0.37% in December, bringing them 4.37% higher than last year. This is a new all-time high, but gains have started to taper. Montreal is currently outperforming the general market, but it’s somewhat expected. The city has trailed the general market by over 21% since 2005, so they’re just playing catch up.

Montreal Real Estate Prices (Teranet-National Bank HPI)

Annual percent change of real estate prices in Montreal.

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

Canadian real estate numbers are showing weakness in the second half. Even with the weakness, the index still hasn’t printed a correction in recent years – prices are just below all-time highs. If you’re expecting a correction, it’s still yet to come according to these numbers.

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  • Ruth Venao 3 years ago

    That’s because the real corrections comes after the recession. Higher prices on declining volume with rising inventory is a recipe for collapse.

  • Mike 3 years ago

    Anyone want to explain what lower highs mean to the non-“financial” crowd?

    • JJ 3 years ago

      When looking at a chart of prices, nothing ever moves linearly, but rather moves jaggedly up and down. However, this up and down movement typically results in an overall uptrend or downtrend.

      An uptrend consists of higher “highs” and higher “lows” on that jagged movement. A downtrend consists of lower “highs” and lower “lows”. BD is insinuating that these lower highs indicate that prices appear to be in a downtrend.

    • vnm 3 years ago

      It’s like when you first start taking psychedelics, a real blast, but then over time you get used to the drugs, and you don’t as high as you used to.

  • Ian 3 years ago

    Prices always fall in the winter, not really news.

    • Simon Chan 3 years ago

      These are seasonally adjusted numbers, which mean the second half are higher than reality. Small December gain seasonally adjusted is most likely a loss in nominal terms.

    • Mtl_matt 3 years ago

      Pretty sure there was a winter in previous years too.

    • george 3 years ago

      Let’s all wait for spring sales disaster numbers and see what you come up with then

  • Joseph 3 years ago

    Anyone looking for a little fun, Stats Can has come up with an interactive resource. It allows users to manipulate the data based on factors that are travked within the tool. It’s worth checking out, even from a curiosity standpoint:

  • SUMSKILLZ 3 years ago

    In 2018, 37% less money was spent on York region real estate, compared to the previous year. 23% less homes sold too. York region RE is in bad shape, not sure why its getting so little press.

    I guess Toronto based RE pundits don’t care about the suburbs? Stop watching the 416, the canary-in-the-coal-mine is in the 905 and the poor soul is lying on its side and barely moving.

    • Joseph 3 years ago


      Your thought on markets like Ottawa and Montreal, which lagged behind Toronto and Vancouver in the boom times and have been gaining traction since about April 2017. When the proverbial waste hits the fan for most of Canada (which seems to have started for a lot of areas), do you think there will be a delay on prices dropping in Ottawa? I respect your opinion, so that’s why I ask. Thanks.

      • Grizzly Gus 3 years ago

        Not all markets will suffer equally but once the proverbial waste hits the fan I wouldn’t bet on continued price appreciation anywhere. Banks will hold back lending to anyone, a drop in gov revenues could impact employment in Ottawa, cheese curd inflation will cripple Quebec.

      • SUMSKILLZ 3 years ago

        My guess is late to the party, early to leave. Incomes are low, taxes are high. There are no supply shortages.

  • Gregory 3 years ago

    Thanks, it’s definitely showing the “soft landing” is true — versus the Bearish Rhetoric that is out there. So this data says,

    Toronto Prices down 3.95% from their peak
    Vancouver Prices down 2.95% from their peak

    • Grizzly Gus 3 years ago

      When bitcoin dropped 5% from 20k to 19k was that a soft landing?

    • SMH 3 years ago

      Mmmm yes “Soft landing” because ya know, we’re already at the bottom >D. Stress test, rising interest rates, Canadians leveraged like never before, Chinese money gone with the wind, of course things are going to pick up this spring! Everyone’s got 200k liquid in the bank for down payments on these $million+ homes including you too right Greg?

  • CJ Ray 3 years ago

    Does this sound familiar? It’s from a 2013 article analysing the late 80s Toronto bubble.

    “Between 1985 and 1989 the average price of a house in the GTA increased by 113% in real terms or by $240,992 in today’s dollars. Low unemployment of the late 1980s and large inflow of immigrants to the area helped to inflate the bubble. Some critics pointed to the fact that in the early 80s many women were still just entering the workforce and thus doubled the income of households by the mid 80s which further fueled the bubble.

    However, one could argue that bubbled was fueled mostly by massive speculative investment. In late 80s everyone thought that the housing prices are going to rise indefinitely and that turned real estate into a compelling investment for everyday Joe. More people jumped into the market hoping to make a fortune causing an artificial increase in demand. Suddenly housing became scarce, which further increased the price. Developers decided to profit on this illusive scarcity by building condos left and right – many of them in downtown Toronto.”

    Article in question:

  • CJ Ray 3 years ago

    To sum it up; it peaked in 1989 and dropped for the next 7 years (1996). It the took until 2002 for prices to come back 189 levels, and not even adjusted for inflation. Will we have to wait 7 years before we can look back and call it a bubble?

  • ke 3 years ago

    which websites you guys use to check vancouver RE price stats? not those home listing / agent sites please

  • ken 3 years ago

    “Vancouver Real Estate Prices Are Down Almost 3% From Peak”

    This is so far from the truth it’s laughable. Vancouver prices are down WAAAAAAY more than 3%. Try a minimum of 15%. Teranet stats are about a full year behind the curve.

  • Bluetheimpala 3 years ago

    People have been struggling in what can only be regarded as ‘good times’ economically. If there is a recession, I don’t think most people even understand the tru me implications. Social norms will change. People will change. Expect a dark time for many Canadians and a complete shift to the right. Darkness is the absence of light. Don’t lose your eyes. Don’t get distracted.Tock. BD4L.

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