Canadian real estate prices may be softening. Numbers from Teranet show that home prices generally declined across the country in September. This decline is led by a drop in prices around the Greater Toronto Area, extending through the Greater Golden Horseshoe. Although not all markets saw decline. Vancouver is once again leading the 11 city composite index in monthly price gains.
Who The F**K Is Teranet, And Why Should I Care?
Teranet is a land registry behemoth that operates, amongst other things, the land registries in Ontario and Manitoba. They build a Home Price Index with National Bank of Canada, that uses land registry data to compare how prices on the exact same house evolve over time. That is, they only use homes that have been sold more than once. This is known as a “sales pair” analysis, and is the kind of the stuff common in the US.
One of the the things they produce is an index for 11 cities, which they combine in an urban index. It’s debatable if it’s more or less accurate than CREA’s urban index. However, if you’re into national housing stats – you should be checking out both.
Canadian Real Estate Prices See Largest Drop Since September 2010
The Teranet National Composite House Price Index fell in September. The index experienced a 0.8% drop when compared to the month before. National Bank of Canada analysts noted this is the largest drop since September 2010. This is also the first time the 11 city composite has dropped since January 2016. While a single drop isn’t a huge concern, the first after a long trend should be noted.
Teranet Home Price Index (11 City Composite)IndexMar 1999Jul 2000Nov 2001Mar 2003Jul 2004Nov 2005Mar 2007Jul 2008Nov 2009Mar 2011Jul 2012Nov 2013Mar 2015Jul 2016060120180240Index
Toronto Leads Declines
The monthly drop was led by Toronto, Canada’s largest real estate market. From August to September, the city experienced a 2.7% drop. Four other cities in the 11 city composite also saw declines: Quebec City (−2.3%), Hamilton (−1.9%), Halifax (−0.4%) and Winnipeg (−0.3%). Victoria saw prices stay flat.
Teranet Home Price Index (11 City Composite) – 1 Month Price Change
Second Month Of Deceleration From Record 12-Month Gains
Despite the monthly decline, annual gains are still around – although tapering. September 2017 represented an 11.4% gain when compared to the same time last year. This is down from the record 12 month gains observed in June and July 2017, when it was 14.2%.
Teranet Home Price Index (11 City Composite) – 12 Month Price Change
Prices Climbed In Five Markets
Not all of Canada experienced lower prices. The other five cities saw monthly price increases: Vancouver (1.3%), Calgary (0.7%), Montreal (0.3%), Ottawa-Gatineau (0.3%), and Edmonton (0.2%). With the exception of Vancouver, these markets have not had a price boom over the past couple of years.
14 Additional Markets Saw Declines, 12 Were In Ontario
Fourteen markets outside of the 11-city composite also experienced declines. Twelve of those, are in Ontario. The greatest Ontario declines were all observed in the Greater Golden Horseshoe: Barrie (−4.5%), Brantford (−1.3%), Kitchener (−1.4%), Oshawa (−3.3%), and Peterborough (-0.7%).
Greater Golden Horseshoe Index Price Change (1 Month)1-Month ChangeBarrieOshawaTorontoKitchenerBrantfordPeterborough-6.0-4.5-3.0-1.50.0Percent ChangePeterborough1-Month Change:-1.3
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The monthly decline was large, but not enough to plunge annual gains into decline. This is only the second month of price growth deceleration, so don’t call it a trend. However, there is mounting concerns about prices falling around the Greater Golden Horseshoe. The economic engine of Canada seems to be seeing prices drop, almost as quickly as they climbed earlier this year.
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
:
The monthly decline was large, but not enough to plunge annual gains into decline. This is only the second month of price growth deceleration, so don’t call it a trend. However, there is mounting concerns about prices falling around the Greater Golden Horseshoe. The economic engine of Canada seems to be seeing prices drop, almost as quickly as they climbed earlier this year.
