Teranet: The Canadian Real Estate Downturn In June and July “Did Not Turn Around”

Canadian real estate prices are seeing slowing growth, but still printed a new record. The TeranetNational Bank House Price Index (Teranet HPI) shows a major slowdown in August. Canada’s largest markets saw the slowest price growth they’ve seen since 2009.

What’s The Teranet HPI?

The Teranet HPI is a price index created by National Bank and the land registry behemoth Teranet. The index measures the price movement for home resales, and smoothes the measurement. It’s similar to CREA’s benchmark price, but with one major difference in how it’s measured. The timing.

The timing of measurement means numbers can be different from CREA. Real estate agents refer to Teranet HPI as “delayed,” since it’s measured at the property transfer. CREA’s benchmarks measures “sales” through the MLS, so their numbers are a little faster. The problem with that is they’re missing non-MLS sales, and they include cancelled ones. Speed over accuracy has it’s trade offs, but neither are better or worse. You just need to know what you’re looking for when looking at either.

Canadian Real Estate Prices Hit All Time High

The Composite 11 (C11), an aggregate of Canada’s largest 11 markets, hit an all-time high according to the index. The C11 increased 0.24% in August, bringing prices 1.37% higher than last year. That was seasonally adjusted, unadjusted it would have been flat. National Bank senior economist Mark Pinsonneault noted, “In other words, after seasonal adjustment, the downtrend of June and July did not turn around in August.” We guess some people were expecting an end of summer price boom?

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.

Toronto Real Estate Prices Fell For A 5th Month

Toronto real estate prices are still negative, but improved on a monthly basis. Toronto saw prices climb 0.27% in August, that represented a 3.34% decline compared to last year. Prices remain 3.75% lower than the peak obtained in July 2017. When accounting for seasonal adjustments, prices were down a fifth month in a row. The data is just as confused as buyers apparently.

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 Falls From All-Time High

Vancouver real estate slipped from a all time high, but is still up year-over-year. Vancouver saw prices fall 0.36% in August, representing a 7.64% increase from last year. Since July 2018 was the all-time high, we’re only 0.36% from the top. After seasonal adjustments, this would be the third month in a row for declines.

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 Hits An All-Time High

Montreal real estate isn’t doing too shabby, printing a new all-time high. Montreal saw prices rise 1.18% in August, making prices 4.77% higher than last year. The monthly climb is very high, but the annual gain is still relatively conservative. Conservative for a price gain in Canada, that is.

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 prices made some of the largest gains in history, so slow growth shouldn’t surprise. Slow growth is trending towards giving back some of the gains to the market. You didn’t think Canada was going to be one of the few markets in history to see a massive double digit pop in prices, and keep growing – did you?

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  • David 3 years ago

    Anyone have insights as to why the trend is reversing in Toronto before even falling as low as it did during the Great Recession?

    • @xelan_gta 3 years ago

      Inventory is too low. It must grow higher for prices to drop.
      By inventory I mean Active Listings / Sales.
      Toronto is a waiting game so far(mostly for sellers) but in Vancouver inventory already increased significantly and prices started to decline even in condo sector.
      Not sure if that helps in any way.

  • Paul 3 years ago

    Hey, look. Montreal, the only city growing without a foreign buyer tax is on the up and up. NOT a coincidence at all.

    • RMS 3 years ago

      Yea but Montreal’s data is very SKEWED and the market is very different. Because the city is divided in 2 (Anglophone West vs. Francophone East). The median household price is about 700k in the West compared to the East, which is about 250k.

      Likewise, the foreign buyers (which is about 2% in Montreal) are exclusively invested in Luxury neighbourhoods West of Montreal. But people in Montreal are actually welcoming foreign buyers, because everyone in the West are mostly home owners. So unlike Toronto and Vancouver, Montreal actually wants foreign buyers (and the Francophones have nothing to worry about since foreign buyers wouldn’t go out of their way to buy properties in the poor french side of Mtl).

  • ken 3 years ago

    “Price growth”
    Please….can we finally dispense with the spin? There is no “growth” in prices, they are falling.

  • SCE 3 years ago

    Numbers don’t look so bad. I’ve noticed this chat isn’t as active these days. Where all da bears at??? Gus are you here? Blue, where are you????

    Dan, I actually respect what you wrote in the last paragraph. Yes, no one should expect double digit gains year in year out.

Comments are closed.