Canadians must be entering election season, because not even real estate prices will give a straight answer. The Teranet–National Bank of Canada House Price Index (TNB HPI) showed prices increased in June. Economists at the bank warn not to read too much into  the increase, however. Without seasonal pressures, the index would have shown a substantial decline for prices.

Teranet-National Bank of Canada House Price Index (TNB HPI)

The Teranet-National Bank of Canada House Price Index (TNB HPI) is an index of price movement. It’s maintained as a partnership between Canada’s largest land registry operator, and a big six bank. The index is similar to the Canadian Real Estate Association (CREA) benchmark price, but there’s a few key differences. The biggest are when it’s measured, and how much data goes through each system.

The TNB HPI measures prices at the land registry,  and used the transfer data. To contrast, the CREA benchmark uses sales at the point of agreement, and ones conducted on the MLS. The MLS is the vast majority of sales, so most of the time they point to similar things. However, in fast moving markets, some sales never close but are make it into the stats anyway.

There’s advantages and disadvantages to both methods. By using agreements, CREA is able to give closer-to-market numbers.  By using land registry data, the TNB HPI gives us a more comprehensive look. Neither his better or worse, but they are different and each provides unique insights. Typical buyers won’t care about the difference,  but analysts – including the ones at your bank, use both. If you’re deep into housing nerdery, using both will give you a better picture.

Canadian Real Estate Prices Increased Due To Season Pressure

Canadian real estate prices made an unusually small increase, but they did rise… kind of. Prices in the C11, the eleven largest markets, increased 0.76% in June, from the month before. This brings the 12 month change to 0.51% higher than the same month last year, and 0.56% below the September 2018 peak. There’s a few notes to consider on this movement – other than the monthly movement is larger than the annual.

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 monthly increase is smaller than usual, and only increased due to adjustments. National Bank economists noted the 0.76% increase in June was well below the 21-year average for the month. The sole reason the index increased at all was due to seasonal adjustments. Unadjusted, the index would have fallen 0.4% in May, and 0.5% in June. They further note “the last two monthly readings cannot be take as a sign of market vigour.”

In plain english? Don’t mistake seasonal pressures for an increase in prices. Things are still moving lower in real terms. That doesn’t mean the outlook is necessarily bad. It means anyone that thinks is good is reaching though.

Toronto Real Estate Prices Up Over 2% From Last Year

Toronto real estate prices made a big move in June, representing almost half of the year’s total movement. Prices were up 1.33% from the month before, bringing them up 2.81% from last year. They’re still down 2.13% from the all time peak reached in July 2017, due largely to the gains made in the condo market. This is the third smallest annual increase for the month of June in the index history.