To provide a national index that is even more consistent with activity in Canada’s real estate market, we will be adjusting our calculation methodology.

Currently, the National Composite index is calculated as a weighted average of price index levels of the eleven Census Metropolitan Area’s (“CMA”) comprising it. The weights are based on the aggregate dollar value of dwellings retrieved from the 2006 Statistics Canada Census.

Effective December 19, 2023 the following methodological changes will be in place:

• The weights will be updated periodically to reflect changes in the aggregate dollar value of dwellings in Statistics Canada’s census. Index history from February 1999 will be divided into six reference periods corresponding to census years. Each reference period will have its own set of weights for the composite index calculation based on the most recent census data available during the period.
• Weights will be applied to the monthly variation in the index rather than the index level.
• Historical C11 index values will be recalculated to reflect this methodological change.

Why are we making these updates?

We want to emphasize that these methodological changes are not dramatic nor will they change the story of Canadian single-family home prices over the past 25 years. The difference in C11 between the current and new methodological approaches is minimal. We believe that the new methodology for calculating the composite index offers several advantages:

• The country is experiencing divergent demographic growth across regions which means that the Canadian real estate market is constantly evolving. Rather than keeping the weights constant, a rebalancing of the weights of the different CMA’s included in the composite index will be carried out periodically using the latest census data. This ensures that the index is more representative of the Canadian real estate market and its variability over time.
• The updated methodology is similar to that of the S&P CoreLogic Case-Schiller Index in the United States, facilitating comparison between the two markets.

The Teranet and National Bank teams are here to support you and answer any questions you may have ahead of these changes. If you have any questions or concerns, please contact your account manager.