TORONTO (Reuters) - Canadian home prices climbed 5.1 percent in March from a year earlier, boosted by strong gains in Toronto, but the annual increase was one of the weakest in the past year, suggesting the recently buoyant national market may be cooling.
The Canadian Real Estate Association (CREA) said on Friday its recently launched MLS Home Price Index rose to 152.9 last month, a 1.3 percent rise from February and a 5.1 percent gain from March 2011.
The index had also risen at a 5.1 percent annual pace in February, the smallest increase since June.
“Overall price trends show that Canada’s housing market continues to moderate,” Wayne Moen, president of the CREA group of real estate agents, said in a statement.
“While that trend paused in March, it may in part reflect an early spring in many parts of the country, resulting in increased competition among buyers.”
The index, which monitors housing prices in five major urban markets, did not provide actual prices. A separate CREA report released on April 16, which used a different methodology, had shown that prices fell in March from a year earlier.
Both reports, however, showed a slowdown in British Columbia’s formerly red-hot housing market.
The latest data showed prices in March rose slightly from the previous month in Vancouver, and in British Columbia’s Lower Mainland and the Fraser Valley areas. But on an annual basis, the pace of price gains moderated.
Vancouver’s year-over-year increase in March was 5.3 percent, compared with a 6 percent annual rise in February. The Lower Mainland market was up 4.78 percent for the year in March, compared with a 5.5 percent gain the previous month.
Those slower price gains were offset by continued strength in Toronto, which once again led all markets. Prices rose 1.65 percent from February and 7.35 percent from March 2011, in line with the Toronto market’s year-over-year gain the previous month.
Prices rose in all five of the metropolitan centers covered by the index, with Montreal up 1.5 percent and Calgary up 1.4 percent from a month earlier.
The data was in line with the April 16 CREA report that showed the average selling price in Vancouver fell 3.1 percent from a year earlier to C$761,742 ($774,200).
Canada’s housing sector did not experience the subprime mortgage boom and bust that drove the United States into recession. It has since had a post-crisis property market rally, triggered by record low borrowing costs.
But Bank of Canada Governor Mark Carney and Finance Minister Jim Flaherty have both expressed concern about the housing boom, with Flaherty tightening mortgage rules several times to try to cool the market.
In legislation introduced on Thursday, Flaherty said he was giving Canada’s bank watchdog the job of making sure that the Canada Mortgage and Housing Corp - a federal agency that is the country’s biggest seller of mortgage insurance and a major provider of mortgage-backed securities - doesn’t stoke an already hot property market and create financial instability.
“We watch the market closely, and I particularly watch the condo market in Vancouver, Toronto and to some extent in Montreal as well,” Flaherty said.
Editing by Jeffrey Hodgson and Peter Galloway