TORONTO (Reuters) - Resale home prices rose to a record high in July, their eighth consecutive monthly gain, according to report on Wednesday that an analyst said signaled a gradual slowdown in a strong market.
The monthly report on 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 1.3 percent in July from June.
Overall prices were up 5.3 percent from a year earlier.
Canadian house prices dipped during the recession, but bounced back quickly and have kept climbing, fueling talk of an overheated market, if not a housing bubble.
The index notched its fourth consecutive monthly increase of more than 1 percent in July. In contrast to the three previous months, however, prices did not rise in all six metropolitan markets surveyed.
Prices rose 2.3 percent in Calgary, 1.7 percent in Toronto, 1.0 percent in Ottawa, 0.9 percent in Vancouver and 0.5 percent in Montreal, while declining 0.9 percent in Halifax.
In five of the six metropolitan areas, prices were at record highs.
“As the numbers show, the dispersion of the monthly increases was very high,” the report said. “Vancouver’s July rise extended its string of consecutive monthly gains to 10, currently the longest run of monthly rises among the markets covered.”
Analysts said, however, that the Teranet HPI report, along with the Canadian Real Estate Association’s report of existing home sales for July, released on August 16, signal an orderly market slowdown.
“The overarching theme of a gradual moderation in the housing market remains intact,” said Mazen Issa, Canada macro strategist at TD Securities.
“On a year-ago basis, the HPI has been stable. Housing market activity has been kept in check,” he added. “For instance, housing starts and building permits have been stable for some time. We believe that in the backdrop of a low interest rate environment, macro prudential regulations will play a greater role.”
Canada’s federal government, worried about high debt levels, has tried to engineer a soft landing for the market with tighter rules for government-backed insured mortgages that took effect in March. The changes cap mortgage terms at 30 years rather than 35 and cut the amount homeowners can borrow against their homes to 85 percent from 90 percent.
The Teranet HPI index tracks home prices over time for repeat sales, so properties with at least two sales are required in the calculations. The report did not provide actual prices.
Reporting by Andrea Hopkins; Editing by Jeffrey Hodgson and Peter Galloway