OTTAWA, (Reuters) - After five years of unsteady gains, the Canadian housing market appears to be cooling with regional disparities looming large, two reports showed on Thursday.
The Teranet-National Bank Composite House Price Index, which measures price changes for repeat sales of single-family homes, showed national home prices rose 0.8 percent in May, but it also showed the pace of price appreciation decelerating slightly on a year-on-year basis.
A separate report from Statistics Canada showed new housing prices edged up 0.2 percent in April from March, as expected, matching previous monthly rises and chugging along at an annual 1.6 percent rate of increase.
The Teranet report measures home resales, a bigger portion of the market than the new-home sales measured by the Statistics Canada report, which is also more dated because its data is from April.
But both add to signs that the housing market is slowing after five years of uneven growth. Resale prices have increased by about 32 percent since the market dipped in 2009 due to the financial crisis and recession.
“Canada’s housing boom hasn’t gone bust - it’s just fizzled out,” Bill Adams, senior international economist at PNC Financial Services, said in statement.
“The drag on the economy from a cooler real estate sector will continue to be a manageable one as long as housing prices are inching higher or even holding steady,” he added. “Longer term, the jury is still out on what will happen to Canada’s highly leveraged household finances when mortgage interest rates someday reset to higher levels.”
Authorities had been concerned that a housing bubble was forming, but of late have been predicting a soft landing for the sector.
While the Teranet report showed a healthy 0.8 percent gain in prices in May, it is a modest reading for what is traditionally one of the strongest sales months of the year. May’s increase was the fifth smallest for May in the 16 years covered by the index, Teranet said.
Prices were up from the previous month in seven of the 11 markets surveyed, led by a 3.1 percent gain in Halifax, a 2.0 percent rise in Hamilton and a 1.6 percent rise in Quebec City.
Prices were flat in May, compared with April, in Ottawa and Vancouver, and declined 0.1 percent in Victoria and 0.3 percent in Winnipeg.
Prices were up 4.6 percent from a year earlier, a slowdown from April’s 4.9 percent price gain. And there were big regional disparities, with four cities seeing prices fall from May 2013.
The year-over-year price gains were led by an 8.7 percent rise in Calgary, an 8.2 percent gain in Vancouver, a 6.0 percent rise in Toronto. Prices were down 0.4 percent in Halifax, 1.2 percent in Montreal, 1.4 percent in Ottawa and 1.6 percent in Quebec City.
Additional reporting by Randall Palmer in Ottawa Editing by Frank McGurty; and Peter Galloway