Canada home resale prices hit record, growth slows

Wed Jun 27, 2012 4:18pm EDT
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By Jennifer Kwan

TORONTO (Reuters) - Canadian home resale prices rose in May from April, hitting record highs for the second month in a row, but the pace of growth continued to slow on an annual basis, the Teranet-National Bank Composite House Price Index showed on Wednesday.

Ten of the 11 metropolitan markets tracked by the index were higher and one was flat. It was the first time in nearly a year that none of the 11 markets declined.

The index, which measures price changes for repeat sales of single-family homes, showed overall prices climbed 1.1 percent in May from a month earlier. It does not show actual prices.

The index was up 5.8 percent from a year earlier, compared with a 5.9 percent rise in April, highlighting a slowing in year-on-year price growth that has been seen in other housing market indicators.

"House prices continue to gradually cool this year after finishing 2011 on a stronger footing," said Mazen Issa, Canada macro strategist at TD Securities.

The index also showed a persisting dichotomy in the market with Toronto prices staying buoyant and the Vancouver market moderating.

Issa said tighter mortgage regulations announced last week by the federal government will help to reinforce the slowdown in the broad market, which will then spread to Toronto. That is likely to happen toward the end of the year, he said.

"A more pronounced correction in prices is expected to occur in 2013," Issa said.   Continued...