Canadian house prices edge higher in April
TORONTO (Reuters) – Canadian home prices rose in April from March as three strong cities in Western Canada more than offset weak showings elsewhere, while the annual gain in prices slowed, the Teranet-National Bank Composite House Price Index showed on Tuesday.
The index, which measures price changes for repeat sales of single-family homes, showed overall prices rose 0.2 percent in April from a month earlier, but the weakest April gain in 15 years except for the 2009 recession.
The index was up 2.0 percent from a year earlier, the smallest 12-month gain since November 2009.
The report suggested Canada’s housing market has regained some spring strength after a long, slow winter of declines following the government’s move to tighten mortgage lending rules in July 2012, but remains subdued.
“We view this report as broadly consistent with stabilization in the housing market over the near-term. Sales activity has been better supported recently … which in turn should also help carve out a trough in national home prices,” Mazen Issa, Canada Macro Strategist at TD Securities, said in a research note.
“Taken in context with the healthy correction in sales and building activity, today’s report further underscores the recent constructive developments in household imbalances,” Issa said.
Canadian policymakers, including Bank of Canada Governor Mark Carney and Finance Minister Jim Flaherty have repeatedly warned consumers about taking on too much household debt to get into the housing market, and have been trying to engineer a soft landing for the sector by tightening bank lending rules.
Residential real estate activity typically picks up in the spring, and economists have been waiting to see if demand will return after a dramatic slowdown since the middle of 2012.
The Teranet-National Bank report showed prices rose more than 1 percent in April from March in three markets in Western Canada, where booming natural resource sectors have boosted economic activity.
Prices were up by 1.3 percent in Winnipeg and Edmonton and by 1.2 percent in Calgary. Excluding the three regions, the composite index would have been flat in April.
Smaller increases included a 0.6 percent rise in Hamilton, a 0.5 percent gain in Montreal and a 0.4 percent advance in Toronto.
Prices were down from the month before in five markets. Vancouver prices dropped 0.8 percent, Quebec City prices dipped 0.5 percent, Ottawa-Gatineau prices were off 0.2 percent, and prices fell 0.1 percent in Victoria and Halifax.
Year-on-year price gains continued to slow but remain positive in 9 of 11 Canadian cities as slowing sales activity has yet to bring down prices.
Prices dropped from April 2012 by 3.3 percent in Victoria and by 2.9 percent in Vancouver, which were among the hottest Canadian markets prior to the slowdown.
Compared with a year earlier, prices were up 6.1 percent in Quebec City, 5.5 percent in Calgary, 5.4 percent in Hamilton, 4.4 percent in Winnipeg, 4.3 percent in Toronto, 3.6 percent in Edmonton, 2.8 percent in Halifax, 1.5 percent in Ottawa and 1.3 percent in Montreal.
The industry group for Canadian real estate agents is set to release its April report on sales of existing homes on Wednesday, which is expected to show a sharp drop in activity from a year earlier even as prices held steady.