About HPI in Canada

Canadian Overview
It is the opinion of Ross Kay Realty Consultants that all current HPI or House Price Indexes in Canada, were not created to quantify, the factual monthly increase or decrease in property values but rather were created for the benefit of the corporations or organizations who publish any such current index whether done so on purpose or through ignorance. Although a “true” RPPI (Real Property Price Index) can be created that provides an accurate and factual representation of housing prices at any given moment in time, such an index can only be created at both a high monthly financial cost and the relinquishing of control over the final values posted to the index itself, by eliminating as many adjustments as possible.

In Canada currently, we have two house price indices that issue public monthly selling price values and in both cases the indexes are critically stalled from being factually accurate because of how and why they were originally created. Although the methodology appears to be similar for both index values, which could imply a statistically valid methodology was used by readers of the index (especially when compared against similar indexes in the U.S.), it is the limits contained in the explanation of the methodology, that reveals why either has limited value to said readers.

MLS® HPI – The MLS® HPI was originally created to divert the consumers attention from swings in the Actual Average Sale prices recorded in the resale housing market. The industry aware that an 8% increase in Actual Average Sale price generally coincides with an 8% increase in commissions paid across the nation is something the industry does not want any attention to be drawn too. Certainly when an average price increased over 50% in 4 years (2003-7), with commissions payable also generally increasing 50% in just those 4 years, when business operating expenses had remained unchanged or in fact been reduced through technological advances, this is something most consumers would not accept.

( Note: This index uses the words "Home Index" to maintain an emotional attachment which fuels this organizations ability to survive the index outcomes.)   

Teranet-National Bank HPI – The Teranet-National Bank HPI was created as an advertising vehicle for the National Bank. The National Bank, not being a member in any MLS® system in Canada (let alone all MLS® systems) has no access to current actual monthly resale home prices. Teranet data used by National Bank is stale dated by as much as 8 months or more, making it's value basically worthless, except for historical review and an accuracy check on Average Selling Prices released by organized real estate months before.

( Note: This index uses the words "House Index" to infer a removal of emotional attachment which fuels these corporations ability to appear impartial to the index outcomes.) 


Versus National Average Selling Price – The Actual (Not Seasonally Adjusted) National Average Selling Price, is the only data tied to the resale home sector that currently can be used by readers and only if they know the context it can be used in. First, without using any seasonal adjustments,  it should be the most accurate number in print on the date it was published for the sales it was recording. Second, by using it to calculate the National  S.O.S., it allows for an accurate assessment of risk, tied to Canadian homeowners net worth.  Using average selling prices for Major Markets or cities with over 50 sales recorded monthly, risk can be assessed locally as well.

It must be remembered that the Average Selling Prices (nationally and locally) will undergo radical changes at certain points in a Trading Cycle and Realty Cycle both. It is only through monitoring stages in these Cycles and then making adjustments for changes to the overall composition of resale housing inventory being sold, that further Risk can be accurately assessed.



RKRC House Price Indices:

Ross Kay Realty Consultants produces our own house price indices collected and produced under our own methodology.

NPPI:  New Property Price Indices ( National, Provincial, CMA) (subscription)
TPPI:  Transactional Property Price Indices ( National, Provincial, CMA) (subscription)
RPPI:  Real Property Price Indices ( National, Provincial, CMA) (subscription)
HVI: Home Value Indices ( National, Provincial)  (public)
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MLS®, Multiple Listing Service®, and all related graphics are trademarks of The Canadian Real Estate Association. REALTOR®, REALTORS®, and all related graphics are trademarks of REALTOR® Canada Inc. a corporation owned by The Canadian Real Estate Association and the National Association of REALTORS®