Canada’s largest land registry operator saw Canadian real estate prices moving higher. The Teranet–National Bank of Canada House Price Index (HPI) shows prices increased in March. Analysts from the creator of the index warned the pandemic is likely to have an abrupt shift soon. As the lockdown carries on, they expect the index to cool in almost every market – especially those in Eastern Canada.

The Index Is Expected To Cool Over The Next Few Months

It’s really important to know how the HPI differs frrom board data to understand this month’s numbers. The HPI is one of the most accurate sources of data, because it only counts completed sales. This differs from real estate boards, which count sales as soon as they are unconditional. Boards consequently have the freshest information, but it’s also subject to revisions. The HPI has more accurate information at reporting, but it’s subject to some lag, since it only includes completed sales.

During most periods, the difference between the two would be mostly minimal. However, during periods of volatility, both will have their issue. Boards may include sales that never actually close, revising numbers lower. The HPI will lag, not reflecting a rapid deterioration as was observed late last month. Neither are better or worse, but those are important details to keep in mind over the next few months.

With that in mind, Teranet-National Bank of Canada analysts left some important notes. Home prices were gaining momentum in March, but that is based on registry data. Since registry data lags, the index should reflect the cold water poured on sales. Analysts believe “the loss to be more prevalent in the metropolitan markets located in Central and Eastern Canada (Toronto, Hamilton, Ottawa-Gatineau, Montreal and Halifax) which so far have pulled the national HPI up.”

Canada’s Largest Real Estate Markets Made Big Gains In March

The C11, an index including Canada’s 11 largest real estate markets, made a big advance last month. The price index climbed 0.62% in March, and is now up 3.84% from the same month last year. The firm notes the monthly increase was double the average seen over the past 10 years.

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.

Toronto Real Estate Prices Reached A New High

Greater Toronto real estate prices advanced a little faster than the C11 index. Prices were up 0.86% in March, an increase of 6.26% from last year. The new peak high for the city is being driven entirely by the rise in condo apartments. This 12-month increase is almost half the increase reported using the board’s methodology.

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 Prices Rise, But Still Lower Than Last Year

Greater Vancouver real estate prices advanced even more than Toronto. The price index increased 1.02% in March, but was still 0.69% lower than the same month last year. Prices remain 4.97% below the peak reached in July 2018.

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 Makes A Smaller Than Average Gain

Probably the most interesting move last month, Montreal lagged the C11 movement. The city’s index increased 0.16% in March, bringing it 7.54% higher than the same month last year. Prices are now at a new all-time high, and rising faster than the C11 has over the past year. The monthly movement is just a little strange, considering the market still hasn’t seen an increase like Toronto or Vancouver yet.

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 Falls By Every Measure

Greater Calgary real estate looked like it was about to recover, but took a nosedive. Prices fell 0.13% in March, bringing them 1.31% lower than the same month last year. Prices are now 8.23% below the peak hit in October 2014 – more than half a decade ago.

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.

Like most other indicators, the abrupt change in direction is of limited use. After the biggest rise of unemployment since the Great Depression, we’re in unprecedented territory. Faster information isn’t necessarily better either, since turbulent times often lead to revisions. The best bet is watching for signs of stabilization, or signs of destabilization.

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