Canada home resales roar, bubble talk flourishes

Fri Jan 15, 2010 2:51pm EST
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By Ka Yan Ng

TORONTO (Reuters) - Sales and prices of existing homes in Canada soared in December, capping a whirlwind 2009 that began weakly and then went on to set record highs for prices, and further stirring debate of a housing bubble.

The Canadian Real Estate Association said on Friday that a total of 27,722 homes changed hands in December, up 72 percent from the same month in 2008, when activity ground almost to a halt in the wake of the global financial crisis.

"Sales activity in 2009 came in like a lamb and went out like a lion," said CREA President Dale Ripplinger.

CREA said the national average price in December rose to C$337,410 ($329,180), up 19 percent year-over-year. For the year as a whole, the national average price climbed 5 percent from 2008 to a record C$320,333.

The association reiterated that the national average price was skewed due to activity in Canada's priciest markets.

Year-to-date activity was still trailing 2008 levels at the end of September 2009, but a 59 percent year-over-year gain in the fourth quarter, the best ever, pushed 2009 sales activity above annual levels for 2008, it said.

The robust figures continue to show the housing sector is leading the overall domestic economy out from a long downturn. But the housing market's strength has also been at the center of a debate over whether a bubble in sector is forming.

"The raft of data will do nothing to quell talk of a bubble, talk that the Bank of Canada and the Canadian Real Estate Association have studiously downplayed," said Doug Porter, deputy chief economist at BMO Capital Markets.   Continued...