Canadian house prices hit record high in January as Vancouver market surges
Posted on Feb 24, 2014 in Mortgage Market Updates and NewsAndrea Hopkins, Reuters
TORONTO — Canadian home prices rose to a record high in January as Vancouver prices surged, the Teranet-National Bank Composite House Price Index showed on Wednesday, even as other housing indicators have shown a cooling market.
The index, which measures price changes for repeat sales of single-family homes, showed national prices rose 0.4% last month from December, the largest monthly rise in five months. They had risen 0.1% in December.
Canada’s housing market had roared back to life through much of 2013 after a 2012 slowdown, but was showing signs of cooling in the final months of last year, and economists have been calling for a soft landing as construction and demand slow and price gains decelerate.
The Teranet data showed prices were up 4.5% from a year earlier, an acceleration from December’s 3.8% price gain. The index does not show actual prices. Advertisement .
“Despite the uptick in home prices, we maintain the view that prices will soften,” Mazen Issa, senior Canada macro strategist at TD Securities, said in a research note.
“Very favorable financial conditions are expected to erode as continued tapering by the Federal Reserve and a more robust growth backdrop lead to higher mortgage rates.”
In October, the Bank of Canada dropped its policy tightening bias, increasing expectations that official interest rates will remain at historically low levels for longer than had been thought. Still, mortgage rates are expected to rise gradually as the Fed scales back its stimulative measures and financial conditions gradually tighten around the world.
That is expected to dampen the rise in house prices in 2014, and most economists say the market will have a soft landing from its boom years rather than a U.S.-style crash.
Prices rose in most of the 11 markets surveyed, led by a 1.1% rise in Vancouver and a 0.5% rise in Toronto and Quebec City. Prices were up 0.4% in Calgary, 0.3% in Hamilton, and 0.2% in Montreal and Winnipeg.
Prices were flat in Edmonton and down 1.7% in Halifax, 1.1% in Ottawa and 0.3% in Victoria.
Year-over-year price gains were seen in eight of the 11 markets, led by a 7.5% gain in Vancouver and a 7.1% rise in Calgary compared to January 2013.
Year-over-year prices were up 5.8% in Toronto, 5.1% in Hamilton, 4.4% in Edmonton, 3.9% in Winnipeg, 0.8% in Montreal and 0.6% in Quebec City.
Prices were down compared to a year earlier in Victoria, were they fell 5.7%, Halifax, where they were down 2.9%, and in Ottawa, where they were 0.6% lower.
© Thomson Reuters 2014