January 12, 2017 / 1:50 PM / in 2 years

UPDATE 1-Canadian home prices rise in December - Teranet

(Adds details from report, background)

OTTAWA, Jan 12 (Reuters) - Canadian home prices rose in December from a month earlier as prices continued to soar in Toronto, the biggest market, and Victoria, while Vancouver prices fell again, the Teranet-National Bank Composite House Price Index showed on Thursday.

The index, which measures price changes for repeat sales of single-family homes, showed national home prices rose 0.3 percent last month from November. Prices were up 12.3 percent from a year earlier, the largest 12-month increase since 2010.

It was the third straight monthly decline in Vancouver after 21 months of gains, shaving a cumulative 2.8 percent from prices in three months, the Teranet report showed.

The once-hot Vancouver market has cooled since the government imposed a foreign buyers tax in August 2016 in response to voter perception that wealthy foreigners, mostly from mainland China, were pricing locals out of the market.

Analysts have speculated that the tax, imposed only in Vancouver, could drive foreign investment to other cities including nearby Victoria, or Toronto, Canada’s hottest market.

Prices in both those cities rose 1.2 percent in December, the report showed, and were up less sharply in six others, including Quebec City, Calgary, Hamilton, Halifax, Ottawa and Edmonton.

Prices fell 0.8 percent in Vancouver and were down 1.2 percent in Winnipeg and 0.5 percent in Montreal.

The government moved again in recent months to tighten mortgage lending rules to cool the market and prevent borrowers from taking on too much debt, the latest in a series of steps over the last five years amid concerns about a potential housing bubble.

The Teranet report showed national prices surged 12.3 percent from December 2015, with the annual gain led by a 19.7 percent increase in Toronto, a 17.7 percent gain in Victoria, a 17.5 percent rise in Hamilton, and a 17.0 percent gain in Vancouver.

Toronto, nearby Hamilton, and Victoria all notched record high prices.

While all of the markets surveyed except Quebec City have seen prices rise from a year earlier, most markets are past their peak and moderated during 2016 - notably the oil industry heartland of Calgary and nearby Edmonton.

Calgary prices were up 0.6 percent from a year earlier but were down 3.3 percent from their October 2014 peak, while Edmonton prices were up 0.1 percent from December 2015 and down 4.0 percent from their 2007 peak, the report noted. (Reporting by Andrea Hopkins; Editing by Bernadette Baum)

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