Home prices suffer smallest annual increase since 2009: Teranet
Canadian home resale prices advanced at the slowest pace in almost four years last month led by a decline in Vancouver, according to the Teranet-National Bank Composite House Price Index.
Prices across 11 cities rose 1.8% in June from a year ago, National Bank Financial said today from Montreal. That is the slowest since a 0.3% gain in October 2009. Vancouver prices dropped 2.8%, the 11th straight decline, while Toronto, Canada’s biggest city, saw a 3.6% gain that was the slowest in almost four years.
Today’s report of moderating prices supports comments from policy makers that households are listening to warnings about becoming overextended with mortgages, and follows Statistics Canada figures yesterday showing new home price gains also slowed. Those figures contrast with unexpected strength reported this week in homebuilding, including record permits issued for multi-unit housing and a smaller-than-expected decline in housing starts.
“The modest 12-month home price inflation does not preclude the fact that the real value of household real estate continues to appreciate,” said Marc Pinsonneault, senior economist at National Bank, in an e-mailed statement. Canadian consumer price inflation was 0.7% in May.
The 12-month gains in the Teranet figures have been slowing from a recent peak of 7.1% in November 2011.
The index, which was set at a reading of 100 in June 2005, climbed to a record 157 in today’s report, meaning resale prices have increased 57% over that time. Prices rose to record highs in six of the 11 cities tracked by Teranet.
“While home resale activity has strengthened in recent months, this resilience may be put to test given the rapid increase in mortgage rates in June,” Pinsonneault said. “We still expect home price inflation to remain subdued in the coming months.”
Today’s report also showed that home resale prices rose 1% on a monthly basis.