By Leah Schnurr
TORONTO, Dec 12 (Reuters) - Canadian home prices edged down in November in their first decline in nine months, the Teranet-National Bank Composite House Price Index showed on Thursday, the latest indication the country’s housing has cooled from earlier this year.
The index, which measures price changes for repeat sales of single-family homes, showed national prices slipped 0.1 percent last month from October.
The average November monthly gain over 15 years of data has been 0.1 percent, Teranet said. It was the first monthly decline since February.
The housing market cooled last year after Canada’s government tightened mortgage rules amid worries that low interest rates were prompting Canadians to take on too much debt.
While the sector has been resilient this year, recent data has been somewhat less robust. New homebuilding slowed slightly last month, while existing home sales declined in October. Economists say worries of rising mortgage rates may have prompted a surge of activity in the summer that is cooling off into the end of the year.
“The slowdown in Canadian housing activity engineered by the government in mid-2012 looks to be a soft landing, as hoped,” said Bill Adams, senior international economist for PNC Financial Services Group, in Pittsburgh, Pennsylvania.
“Canada’s decent job market is keeping housing prices resilient, despite higher interest rates and tighter mortgage underwriting standards.”
The strength in the housing market, which boomed following the financial crisis, has led to fears Canada is headed for a U.S.-style crash, though the Bank of Canada said last week it still expects a soft landing.
Even with the decline in national prices, home values remain elevated and some local markets showed strength last month. Prices in Vancouver - one of Canada’s hotter markets - rose 0.6 percent on the month, hitting a new record after seven straight months of price gains.
But nearby Victoria saw prices drop by 1.8 percent, while prices in Montreal and Toronto also declined.
National prices were up 3.4 percent from a year ago, an acceleration from October’s 3.1 percent price gain, due to a greater drop in prices in November 2012.
Compared to a year ago, prices were up 10 out of the 11 cities covered in the report, with only Victoria seeing prices that were lower than last year.
The risk of home prices falling should be limited with a more dovish Bank of Canada expected to keep interest rates low for some time, said Mazen Issa, macro strategist at TD Securities in Toronto.
At the same time, the upside of price appreciation should be limited as well with affordability slowly eroding, he said.
“These competing forces should allow home price appreciation to stabilize - a trend that appears to be unfolding in recent months,” Issa wrote.