Teranet-National Bank: Canadian Real Estate Prices See Slowest June In 17 Years

Canada’s largest land registry and a Big Six Bank are starting to see a slowdown for Canadian real estate. The TeranetNational Bank House Price Index (TNB HPI) increased in June. National Bank economists warned this isn’t the bullish sign it appears to be. The index actually made the smallest increase for June in 17 years, and was negative when seasonally adjusted.

Teranet-National Bank House Price Index

The Teranet-National Bank House Price Index (TNB HPI) tracks the price movement of resale homes. It’s created as a partnership between Teranet, Canada’s largest land registry operator, and a Big Six Bank. It was designed as an independent index for the financial community. The concept is similar to CREA’s benchmark price, but there’s a key difference – the TNB HPI uses land registry data. As opposed to the MLS sales data CREA uses.

There’s pros and cons to both data sets, and neither are right or wrong, but they are different. Since CREA and related boards use MLS data, the data is entered as soon as the sale becomes unconditional. Since the measurement is taken before registry, it’s faster – but has a chance of not going through. This is rare, but happens more frequently during periods of rapid volatility.

The TNB HPI only uses land registry data, which means only sales that have competed go through. This also has the benefit of logging even non-MLS sales, which can be 10-20% higher. The issue is it typically takes a little longer for sales to hit the registry. This means the information is about 30 to 60 days from the price agreement. Some would argue this is a lag. Others argue MLS data is incomplete. Neither is better or worse, but they are different, so it’s worth it for analysts to check both for diversion or confirmation.

Canadian Real Estate Prices Rise At The Slowest Pace In 17 Years

The C11, an aggregate index of Canada’s largest 11 markets, began to show signs of slowing. Prices increased 0.69% in June, and are up 5.88% from the same month last year. When seasonally adjusted though, prices fell 0.1% in June – the first decline in 11 months. National Bank called this “confirmation” of the housing market slowdown.

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 unadjusted price growth was much slower than usual, putting a drag on total growth. National Bank noted the 0.69% increase in June is half the average for the month, over the past ten years. It also happens to be the smallest increase for June in 17 years. Overall this resulted in some deceleration of the 12-month price growth trend, after 10 months of accelerating.

Toronto Real Estate Prices Grow Faster Than National Average

Greater Toronto’s composite price index reached a new record high last month. Prices increased 0.75% in the month of June, and are up 9.09% from the same month last year. This represents a new record for the index, and acceleration on price growth. Worth mentioning, Toronto’s real estate board has been noting abrupt price growth deceleration since March. This isn’t necessarily a conflict, but could be a slight lag when using registry data vs MLS data.

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 Prices Are Still Below 2018 Peak

Greater Vancouver’s composite price index increased, but lagged the national movement. Prices increased 0.18% in June, and are now up 1.13% compared to the same month last year. Prices remain 4.18% lower than they were at the peak in July 2018. This index may also be lagging the board’s index, which is actually seeing prices fall further from peak.

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 Are Growing Twice As Fast As The National Average

Greater Montreal’s composite price index is growing at twice the pace of the national movement. Prices increased 1.36% in June, and are up 10.28% from the same month last year. This represents a new all-time high for the market. The market is overperforming on both the month and year.

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 Fall Further From October 2014 Peak

Calgary real estate almost looked like it was in the clear, but reversed in January. Prices are down 0.09% in June, bringing them 1.29% lower than the same month last year. Composite prices are now down 8.28% from the peak reached in October 2014. With the monthly decline, prices are getting further from peak.

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 is seeing prices rise, but at a pace below expectation. When adjusted for seasonality, prices are even falling by this measure. Large markets like Toronto and Montreal  are outperforming the national index, which is contrary to CREAs HPI. CREA’s numbers show these markets are underperforming. The data is mixed, but this could be an indication some segments of the TNB HPI are showing their lag.

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  • James Wilson 3 years ago

    These numbers actually imply Toronto numbers are flat when seasonally adjusted.

    • Trader Jim 3 years ago

      I hate seasonal adjustments on asset prices. Mostly because they’re only reported by MSM when prices need to be overstated. It leads to positive bidding bias, and drives prices higher since the people using the numbers don’t know or care what it means.

      It makes no sense though. Would you say Facebook is $200/share, but just $150/share seasonally adjusted? Then why do it with a house?

    • Mortgage Guy 3 years ago

      Condos are junk. Prices on new construction are not lower than resale. If you understand developers sell at a forward price premium, it means they’re expecting prices to fall.

      Detached units selling, but they’re also being de-listed and re-listed to make it seem like its selling in minutes. One house I’ve been watching has been on the market for months. Sold in just one day recently. *eye roll*

  • straw walker 3 years ago

    Show patience
    I think this market will slowly come back to the buyers..

  • Kolf 3 years ago

    I think people need to hold the government responsible for making home unaffordable for most people in Toronto and Vancouver.

    People with multiple homes should not be allowed to defer mortgage payments or any other kind of assistance.

    • M.Bury 3 years ago

      I totally agree with this:
      “People with multiple homes should not be allowed to defer mortgage payments or any other kind of assistance.”

      There should also be a bonus savings rate for savers. If debtors are able to get a 10 points reduction in their credit card interest, savers should get a similar reward.

    • alvi 3 years ago

      Yeah you are correct, so far July sales seem much slower than June.though,not sure if this is due to summer doldrums

  • Robert 3 years ago

    Another misleading headline from BD. Article mentions itself that Teranet data is delayed, because it’s based on “closing date” instead of “sale date”. So pretty much June’s number is showing what was happening in April. And yes market stopped in April due to Covid. Putting “slowest June” in headline is so misleading because June actually picked up a lot! Especially in freehold market which is on fire now! Sales in June outpaced 2019 in GTA . I wish BD was more balanced and less biased especially when it comes to geadlins

    • Robert 3 years ago


    • Luigi Vampa 3 years ago

      They are directly comparing Teranet Junes to each other so its a %100 accurate statement. Got some skin in the game perhaps?

      • Robert 3 years ago

        While technically it’s accurate statement (due to shut down in April) – it’s still very misleading headline since it does not represent current state of market. It leads someone to believe that there is huge slowdown, while market is extremely hot. I’m actually on buyer side who is trying to find a house right now and can’t get anything reasonable. Market is insane for freehold right now!!!

        • RM 3 years ago

          You’re missing the point… They’re just using the TNB HPI naming convention, which is their “June”. That’s the only way to do comparisons to previous Junes. The inherent flaw, which BD pointed out, has nothing to with them.

        • Luigi Vampa 3 years ago

          Dont fall into the fomo trap. Just hold off till next year. There is no way that the repercussions of the pandemic and economic collapse will not trickle down into the real estate market.

        • alvi 3 years ago

          From what I can see July numbers are weaker than June, not sure if this is summer doldrums or not. I

    • BDMan 3 years ago

      I wish BD was a more balanced website as well. On the surface, they seem that way. After reading for more than a year now, it is clearly geared towards the bear crowd.

      Nothing wrong with that but that’s why I look at realtor blogs in addition to this and try to piece things together.

    • Li 3 years ago

      Not misleading at all.

      “Confirmation of housing-market slowdown due to COVID-19” was the title of the Teranet report itself.

      What’s misleading is when real estate boards use sales that fall through in their calculation of prices and sales volumes.

      • Ahmed 3 years ago

        Didn’t you hear the bank is biased too? Everyone that’s not a Realtor isn’t isn’t biased. They’re the only source of information, even though they don’t understand how they come up with their own numbers.

  • bob ross 3 years ago

    Data doesnt really have much value no more when you can trick it with all sorts of wierd fuckery. A unit beside me sold in 7 days but actually was delisted and listed 3 times before that since end of march, so is the day sold in 7 days or we factoring in the months on top of that? … probably not.

  • Joey 3 years ago

    A pandemic isn’t even stopping this market so anyone thinking it will become a buyer’s market is really wishful thinking….. Economy will recover… interest rates will be low until 2023…prices will zoom up more…….Get onboard while you still can.

    • Vincent Domenico 3 years ago

      And if the country has to go into another lockdown in the fall then what?

      • alvi 3 years ago

        The bigger question is how robutst will US recovery be over the next 12-18 months with the massive monetary and fiscal stimulus

Comments are closed.