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.
A separate report from Royal Bank of Canada also showed that consumer confidence was far from buoyant as stock market declines, gloomy global headlines, and a tepid economic recovery in the United States dampened sentiment.
The quarterly RBC report showed 26 percent of respondents anticipate that the national economy will improve over the next year, down 16 points from the previous survey.
The overall index fell to 70 points, a drop of 24 points from three months earlier.
“The drop in the RBC Canadian Consumer Outlook Index reflects ongoing global economic uncertainty, showing that strong Canadian economic fundamentals insulate us but do not make us immune to the turmoil around the globe,” Craig Wright, senior vice-president and chief economist at RBC, said in the report.
“Given the uncertainty, the drop in the index was not unexpected, though it was disappointing.”
RBC now forecasts 2.4 percent growth for the Canadian economy in 2011, down 0.8 percentage points from the bank’s June forecast.
Canada’s central bank downgraded its outlook for the economy and for inflation on Tuesday and suggested it will hold official interest rates low for longer to stimulate economic growth.
The Bank of Canada will provide further details on its economic and monetary policy outlook later on Wednesday.
Editing by Jeffrey Hodgson and Peter Galloway