Canada’s largest land registry and a Big Six Bank are starting to see a slowdown for Canadian real estate. The Teranet–National 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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