Canada home resale price index up, no crash seen
* Month-on-month price rise of 0.3% in March
* Prices in four out of six metropolitan markets rise
* Canadian Real Estate Association says home market not headed for U.S.-style crash
Ka Yan Ng – Reuters
Canadian home resale prices climbed in March for an 11th straight month, but the gain was one of the smallest since prices began rising last year, according to a report on Wednesday.
The Teranet-National Bank Composite House Price Index, which measures price changes for repeat sales of single-family homes, showed overall prices rose 0.3% in March from February.
“The broad slowing of monthly gains is consistent with a general loosening of resale-market conditions across the country. For some months now, homes have been coming on the market faster than they have been selling,” the report said.
March’s gain was only a tick ahead of February’s 0.2% increase, which was the smallest monthly gain since the end of a recession-induced price slump.
The report tracks six metropolitan areas: Ottawa, Toronto, Calgary, Vancouver, Montreal and Halifax. The index has been rising for almost a year.
Prices in four of the markets rose from the month before, led by a 1.4% gain in Halifax. Montreal and Vancouver both advanced 0.6%, and Ottawa climbed 0.1%.
Toronto prices were little changed on the month.
Calgary fell for a third month in a row, with March prices down 0.3% from February.
Overall, the Teranet index showed prices were up 11.6% from a year earlier.
The index offers more evidence that Canada’s real estate market could soon start to cool, thanks to increased housing supply and interest rates that are widely expected to rise through the latter half of the year.
The Canadian Real Estate Association (CREA) said last week that home resales slowed in April while new listings climbed.
CREA also released a report on Wednesday that said Canada would avoid a U.S.-style housing price retreat, mostly because of solid mortgage market trends.
The industry group described the warnings of a U.S. style correction — a massive oversupply due to a surge in mortgage defaults — as “overwrought.”
“Canada will avoid a massive oversupply of homes and a sharp drop in housing demand,” CREA’s chief economist, Gregory Klump, said.
“Canada’s solid mortgage market trends, conservative lending practices, and prudent borrowing by home buyers mean that Canada will avoid a U.S.-style housing price correction.”
CIBC World Markets said on Tuesday that “stabilizing forces are already at play” in the housing market, and that higher interest rates will lead to a modest decline in home prices, probably between 5% and 10%, in the coming year or two.
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