Canadian Home Prices Rose 0.7% in July from June: Teranet
Canadian home prices rose in July from June to an all-time high, but the modest monthly gain suggests the robust housing market may be cooling again, according to data from the Teranet-National Bank Composite House Price Index on Wednesday.
The index, which measures price changes for repeat sales of single-family homes, showed overall prices rose 0.7 percent in July from a month earlier, the fifth straight monthly gain but on the low side of typical summer housing strength.
The index was up just 1.9 percent from a year earlier. Though this was a slight acceleration from June, the 12-month gains of these two months were the smallest since November 2009, the report said.
The report echoes data on both sales activity and prices that suggest Canada’s housing market has recovered well after the government tightened mortgage rules in July 2012, causing a sharp slowdown in demand in the second half of 2012.
While some economists still predict a U.S.-style crash, a spring recovery in sales has led some to believe Canada has achieved a soft landing.
“Home prices have rebounded in tandem with the surge in existing home sales in the spring. But despite the nascent recovery in the housing market in recent months – which reflects the typical dynamic of a temporary slowing following the introduction of tighter mortgage regulations – we believe that further upside in prices will be limited,” Mazen Issa, Canada Macro Strategist at TD Securities, said in a research note.
He said the recent rise in mortgage rates will reduce affordability, limiting sales and slowing the rate of price rises over the rest of 2013 and into 2014.
The Teranet data showed prices rose in July from June in nine of the 11 metropolitan market surveyed, led by a 2.6 percent rise in Victoria, a 1.8 percent rise in Hamilton, a 1.3 percent gain in Toronto and a 0.8 percent rise in Edmonton. Prices were up 0.5 percent in Calgary, 0.3 percent in Ottawa, Quebec City and Vancouver, and flat in Montreal.
Prices dropped in the month by 0.4 percent in Winnipeg and 0.6 percent in Halifax.
Year-on-year prices dropped in two cities — Victoria, where they were down 4.0 percent from July 2012, and Vancouver, where they fell 2.0 percent. British Columbia had the hottest housing market going into the late 2012 slowdown.
Compared with July 2012, prices were 6.7 percent higher in Hamilton, 5.9 percent higher in Calgary, 3.8 percent higher in Quebec City, 3.5 percent higher in Edmonton, 3.4 percent higher in Toronto, 3.2 percent higher in Winnipeg, 1.5 percent higher in Halifax, 1.1 percent higher in Montreal and 0.9 percent higher in Ottawa.