Home prices at record, but confidence falls

Wed Oct 26, 2011 10:10am EDT
 
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By Andrea Hopkins

TORONTO (Reuters) - Canadian home resale prices hit a record high in August, their ninth consecutive monthly gain, but consumer confidence fell for the fifth time in six months, highlighting Canada's two-speed economy and cloudy outlook.

The Teranet-National Bank Composite House Price Index, which measures price changes for repeat sales of single-family homes in six metropolitan areas, showed overall prices were up 0.9 percent in August from July.

The rise, the fifth straight increase of 0.9 percent or more, took overall prices to 5.4 percent above a year earlier and pushed the index to a new high, confirming Canada's housing market is still hot.

Defying global trends, the market continues to accelerate, particularly in major cities such as Toronto and Vancouver. Prices dipped during the recession, but bounced straight back and have kept climbing since.

But weakness was evident elsewhere in the economy as consumer confidence fell in October, the fifth decline in the last six months, according to a report by the Conference Board of Canada.

After a marginal increase last month, the Conference Board's confidence index reversed course and declined 3.3 points to 71.8 in October, its lowest level since May 2009.

Just 19.9 percent of survey respondents indicated that they expect their financial situation to improve over the next six months, a decline of 3.9 percentage points.

"Currently, the difference between positive and negative responses is at the lowest level since the country was in the midst of the 2008-09 recession," the board said.   Continued...

 
<p>A real estate sign is seen on front of a house in Toronto June 19, 2009. REUTERS/Chris Roussakis</p>