3 Min Read
* Prices up from May in all 11 markets surveyed
* Year-over-year appreciation slowing
* Economist sees limits to upside
By Andrea Hopkins
TORONTO, July 12 (Reuters) - Canadian home prices rose in June from May as a seasonal uptick in sales pushed prices to an all-time high, but the annual price increase was the smallest in more than three years, the Teranet-National Bank Composite House Price Index showed on Friday.
The index, which measures price changes for repeat sales of single-family homes, showed overall prices rose 1.0 percent in June from a month earlier and were up in every major Canadian city.
But the index was up just 1.8 percent from a year earlier, marking the smallest 12-month gain since November 2009.
The data adds to evidence that the Canadian housing market is recovering after slowing dramatically in mid-2012 when the government tightened mortgage lending rules in a bid to prevent a housing bubble.
"The June Teranet HPI report points to a nascent recovery in the housing market which is entirely consistent with our previous analysis that tighter mortgage regulations only have a temporary impact on housing," Mazen Issa, Canada Macro Strategist at TD Securities, said in a research note.
Canada's red-hot market in early 2012 led many observers to fear a housing bubble was forming, particularly as condo builders ramped up development in major cities including Toronto and Vancouver. While some economists still predict a U.S.-style crash, the spring recovery in sales has led some to believe Canada has achieved a soft landing.
Issa said the bounceback in activity in recent months will be limited on the upside as the supply of newly completed but unoccupied units hit the market.
"Moreover, stretched household balance sheets will limit mortgage credit growth and contribute to lower demand for real estate. Finally, the back up in bond yields since mid-May has begun to filter into the mortgage market and if sustained, it will impact affordability over the medium-term," he said.
The Teranet data showed prices rose in June from May in all 11 of the metropolitan markets surveyed, led by a 1.8 percent rise in Hamilton and a 1.4 percent rise in Toronto and Calgary. Smaller rises included a 0.9 percent gain in Ottawa, Halifax and Vancouver, a 0.8 percent rise in Winnipeg, a 0.6 percent rise in Montreal, a 0.5 percent rise in Quebec City, a 0.3 percent rise in Edmonton and a 0.1 percent gain in Victoria.
Year-on-year prices dropped in two cities -- Victoria, where they were down 4.6 percent from June 2012, and Vancouver, where they fell 2.8 percent. British Columbia had the hottest housing market going into the downturn.
Compared with June 2012, prices were 7.0 percent higher in Hamilton, 5.6 percent higher in Quebec City, 5.5 percent higher in Calgary, 3.9 percent higher in Winnipeg, 3.6 percent higher in Toronto, 3.0 percent higher in Edmonton, 2.3 percent higher in Halifax, 1.4 percent higher in Montreal and 1.1 percent higher in Ottawa.