Is it Time to Move Canadian Real Estate Capital to the USA

Wed Sep 19, 2012 11:08am EDT  By Andrea Hopkins, Toronto, Reuters

Canada August resale data signals cooling house market.

Canadian home resale prices edged higher in August from July but a slower pace of gains and falling prices in three of 11 markets surveyed suggested the market is cooling, the Teranet-National Bank Composite House Price Index showed on Wednesday.

The index, which measures price changes for repeat sales of single-family homes, showed overall prices climbed 0.2 percent in August from a month earlier, the smallest August gain in 12 years.

The index, which does not provide actual prices, was up 4.1 percent from a year earlier, the ninth consecutive month of deceleration in 12-month gains.

The report is the latest in a string of data suggesting that Canada’s long upswing in house sales and prices is coming to an end. With cooling evident in Vancouver and several other major cities, speculation has turned to whether the slowdown will be a soft landing or a crash.

“The latest print for the Teranet HPI reinforces the trend observed in other housing measures with a correction well underway in some key markets,” Mazen Issa, Canada macro strategist at TD Securities, said in a note to clients.

“While the national measure has been held up by the buoyancy in prices in Toronto, this market is steadily decelerating on a (year-on-year) basis.”

The 0.2 percent monthly gain in August was the sixth such increase in a row and was led by a 2.0 percent rise in Hamilton. Prices rose 0.8 percent rise in Ottawa and 0.7 percent in Toronto and Edmonton. Halifax prices were up 0.5 percent, while Winnipeg and Calgary both notched 0.4 percent gains, and Montreal climbed just 0.1 percent.

Prices fell in three cities. Vancouver led the losses with a 1.2 percent decline, Victoria prices fell 0.7 percent, and prices in Quebec City fell 0.6 percent.

Compared with a year earlier, prices were up 8.3 percent in Toronto, 7.1 percent in Hamilton, and 6.5 percent in Winnipeg. They were 1.1 percent lower in Victoria and 0.3 percent lower in Vancouver.

A long run-up in Canadian house prices and low supply in some markets had sparked concern that a housing bubble was forming. The federal government tightened mortgage lending rules four times in four years to try to prevent borrowers from taking on too much debt to buy into the market.

“As the impact of the fourth iteration of tighter mortgage regulations becomes further entrenched, the housing market will continue to moderate and hence, reducing the urgency for the Bank of Canada to tighten policy,” Issa said in the research note.


Paste your AdWords Remarketing code here