House prices rise at fastest pace in 10 months
Canadian home prices rose across the country in April, advancing at their fastest pace in 10 months, the Teranet-National Bank composite house price index shows.
Overall, prices gained 1.1 per cent over the month before, the largest of five consecutive monthly increases.
“The large rise of the composite index in April may have been due to front-loading of sales to beat the announced shortening of the maximum amortization period for insured mortgages,” said National Bank senior economist Marc Pinsonneault.
It was the first time in 10 months that gains were recorded in all of the six major city areas covered by the index, which measures price changes for repeat sales of single-family homes in six metropolitan areas.
But analysts do not expect the gains to last.
“House prices in Canada have been going up this year despite relatively weak demand in terms of sales,” said TD Economic analyst Leslie Preston. “But going forward, stricter mortgage insurance rules will likely dampen demand further. And once interest rates start rising in 2012, the resulting deterioration in affordability should weigh on prices.
“That said, interest rate increases are expected to be gradual and moderate in nature, which should help Canadian house prices avoid a ‘hard landing,’ declining approximately 10 per cent peak-to-trough over the next couple of years.”
Gains were highest in Vancouver, where prices rose 1.8 per cent, followed by Ottawa (1.4 per cent), Montreal (one per cent), Halifax (0.8 per cent), Toronto (0.7 per cent) and Calgary (0.6 per cent).
Year-over-year, prices were up 4.4 per cent from 4.1 per cent in March. The biggest annual gain was recorded in Ottawa, up 7.5 per cent.
TABLE
Metropolitan area / Index level April / per cent change m/m / per cent change y/y
Calgary 152.81 / 0.6 per cent / -3.5 per cent
Halifax 134.13 / 0.8 per cent / 5.3 per cent
Montreal 140.39 / 1.0 per cent / 7.4 per cent
Ottawa 132.69 / 1.4 per cent / 7.5 per cent
Toronto 126.62 / 0.7 per cent / 4.1 per cent
Vancouver 162.26 / 1.8 per cent / 5.8 per cent
National Composite 140.47 / 1.1 per cent / 4.4 per cent
