July 12, 2018 / 12:59 PM / 10 months ago

Canada home prices rise in June, recover peak: Teranet

OTTAWA (Reuters) - Canadian home prices rose in June from May, the fourth straight rise after weakness late last year, returning national prices to just barely above the previous peak in August 2017, data showed on Thursday.

The Teranet-National Bank Composite House Price Index, which measures changes for repeat sales of single-family homes, showed prices increased 0.9 percent on a monthly basis.

It was the third-smallest June gain in the last 14 years, though prices rose in 10 of the 11 markets surveyed, Teranet said.

“If we ignore the seasonal component of monthly variations, we cannot speak of a soaring index. The latest run of monthly increases is merely a recovery of ground lost in the second half of last year,” Teranet said in the report.

Price gains continued to decelerate on an annual basis, up 2.9 percent from June 2017, the smallest 12-month increase since 2013 and the 12th consecutive monthly slowdown from last June’s record 12-month gain of 14.2 percent.

Prices in Toronto were up 1.2 percent on a monthly basis, suggesting stabilizing prices in the country’s biggest city following recent declines after the provincial government adopted measures to rein in the market, as well as tighter mortgage rules that took effect at the start of 2018.

The Toronto index is down 4.8 percent from its peak in July 2017, Teranet said, and down 2.8 percent year-over-year.

Vancouver prices gained 0.6 percent, taking the index to a new record. Still, recent gains have been smaller than before, consistent with slower sales, and June’s gain was the fourth smallest since 2001 for the traditionally strong month.

Canada’s once-hot housing market has softened in the wake of four interest rate hikes by the Bank of Canada since July 2017, though the condo markets in both Toronto and Vancouver have remained robust and the central bank said housing markets may have begun to stabilize after a weak start to 2018.

The report showed the condo market continued to lead Toronto and Vancouver price gains, as tighter mortgage rules have priced many buyers out of more expensive single-family homes.

For the first half of 2018, Toronto prices rose at an annual rate of 5.7 percent, according to the index, while the condo segment jumped 12.1 percent. In Vancouver, prices in the condo segment are up at an annual rate of 17.6 percent since September 2017.

Reporting by Andrea Hopkins; Editing by Leslie Adler

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