Canadian real estate sales may be slow, but the few people buying are paying more. Brookfield’s Real Property Solutions (RPS) released its House Price Index (HPI) for April, showing annual growth continuing to decelerate. However, the 12-month change fails to capture a potential shift in sentiment—last month prices made the biggest jump in 9-months.
The Real Property Solutions House Price Index
Most readers are familiar with the CREA HPI and its benchmark home. It uses a benchmark home, a fictional dwelling composed of the features found in a typical unit in the region. This appraisal strategy then tracks the value of each feature through sales in the MLS to update the benchmark’s value. Then the change in the benchmark’s value is used to determine the market’s direction.
The RPS HPI is conceptually similar but uses a different approach to tracking prices over time. Rather than a benchmark home, it relies on land registry data like the National Bank-Teranet HPI, and tracks the same home over time. Those sales are then weighed by neighborhood, region, and nationally to come up with an index price.
Neither model is better or worse, and each has its benefits and flaws. For example, using the MLS gives a much faster market view, but it’s not the most comprehensive approach. Sales can fall through, and non-MLS sales aren’t included.
Using land registry data is more comprehensive, including more sales and only completed transactions. However, a sale can take 3-6 months to close and complete transfers. During volatile markets, that can mean a lot of sentiment is missed.
Canada’s organized real estate industry and the media tend to prefer the CREA HPI. The mortgage and finance industries use the RPS to determine appraisal value. In short, your friends will be referencing CREA but your bank will be talking RPS.
Canadian Real Estate Prices Jumped The Most In 9 Months
The price of an index home across Canada.
Source: Better Dwelling; RPS HPI.
Canadian real estate prices are moving higher but losing steam. The RPS HPI climbed 0.3% (+$2,410) to $806,275 in April, marking its second consecutive monthly increase. Despite the slow sales and lofty inventory, last month’s growth was the largest upward move in 9-months. Whether it’s a change in sentiment or noise remains to be seen.
Some food for the bulls: the above benchmark data shows higher lows and higher highs, often a sign that asset price growth may be around the corner. Since the record high in 2022, three troughs have formed, each higher than the last. This indicates that buyers are rushing in and supporting prices with smaller pullbacks.
At the same time, two peaks have formed over this period. Over the past 3 years, buyers became more tolerant of higher prices before balking and sending them lower. Pay close attention to whether this cycle’s upswing establishes a new 3-year high—especially if buyers return in a reasonable volume. Remain skeptical if buyers don’t return.
Canadian Real Estate Price Growth Slows, But Not Negative
Annual growth in the price of a home across Canada. RPI HPI.
Source: Better Dwelling; RPS HPI.
Annual growth is showing a contrary trend to the monthly acceleration. Annual growth slowed to 1.9% (+$15,165) in April, marking the third consecutive month of deceleration. It had the slowest growth since September 2024, but slow growth is still growth.
Canadian Real Estate Prices Barely Corrected From Highs
Canadian real estate prices have been relatively stagnant since peaking in 2022. A typical home is just 6.3% (-$54,494) below the record high hit 35 months ago. Not large enough to be considered a correction, and the price of a home has been at a similar level since early 2022.
Canadian real estate prices can’t decide where they should be going. They’ve been bouncing around the same range for the past 3 years, with sellers confident the market will return to its glory as soon as the issue of the year is resolved. Unfortunately, home prices remain largely out of reach for buyers in most major cities, and that will likely persist until an actual correction occurs.