By Andrea Hopkins
TORONTO, March 12 (Reuters) - Canadian home prices rose in February, pushing a national index of prices to a record high for the second month in a row, the Teranet-National Bank Composite House Price Index showed on Wednesday.
The index, which measures price changes for repeat sales of single-family homes, showed national prices rose 0.3 percent last month from January.
Prices were up 5.0 percent from a year ago, an acceleration from January’s 4.5 percent price gain.
“Another month, another surprise on the upside when it comes to Canadian home prices. Price increases are still outpacing income gains by a wide margin in many markets, a situation we deem unsustainable in the longer run,” TD Economics analyst Sonny Scarfone wrote in a research note.
Canada’s housing market has remained stubbornly robust in recent years, notwithstanding a slowdown in 2012 when the federal government tightened mortgage lending rules to prevent home buyers from taking on too much debt to get into the market.
While some observers fear the booming housing market - prices rise 26 percent in the last five years, according to the Canadian Real Estate Association - could crash like the U.S. market did in 2008-2009, most economists expect a gradual cooling in demand and prices as mortgage rates rise.
TD’s Scarfone said a low supply of new listings remains a big driver of upward pressure on house prices, but rising mortgage rates throughout 2014 should make housing less affordable.
The Teranet data showed that prices rose in February from the month before in 6 out of 11 cities, mostly in Western Canada, and fell in 5 cities, all of them in Ontario, Quebec and the eastern part of the country.
From a month earlier, prices rose 1.1 percent in Calgary, 0.6 percent in Edmonton, 0.5 percent in Winnipeg, 0.7 percent in Montreal, and 0.9 percent in Victoria and Vancouver. Vancouver’s gain was the 10th straight monthly increase.
Prices were down 1.7 percent in Halifax and Quebec City, 0.5 percent in Hamilton, 0.8 percent in Ottawa, and 0.1 percent in Toronto. Toronto prices have risen only twice in the last six months, the report noted.
Year-over-year price gains were seen in 7 of the 11 cities surveyed, the first time since October 2009 that there was price deflation in at least four of the regions covered.
Compared to a year earlier, prices were up 9.6 percent in Calgary, 5.4 percent in Edmonton, 5.0 percent in Hamilton, 1.9 percent in Montreal, 6.1 percent in Toronto, 7.7 percent in Vancouver and 3.5 percent in Winnipeg.
Prices compared to a year earlier were down 4.7 percent in Halifax, 0.6 percent in Ottawa, 2.0 percent in Quebec City and 3.4 percent in Victoria.