Canadian home prices in January were up 0.4% from the previous month, according to the Teranet–National Bank National Composite House Price Index – the second consecutive monthly rise after falling from September to November.
January prices were up from the previous month in four of the six metropolitan markets surveyed: 0.9% in Vancouver, 0.5% in Toronto, 0.4% in Halifax and 0.3% in Montreal. Prices were down 0.6% in Ottawa, a fifth straight monthly decline, and 1% in Calgary, a fifth decline in six months.
“January’s price increase confirms that the correction experienced towards the end of 2010 was short-lived,” said Marc Pinsonneault, senior economist with National Bank Financial Group.
“In fact, market correction is now a local phenomenon (Ottawa and Calgary). At the national level, January’s prices were still one % below those in August 2010, but they were 5.5 % above their pre-recession peak.”
The 12-month gain in the composite index slowed to 3.9% in January, the seventh consecutive month of deceleration. The largest 12-month rise was 8.2% in Halifax. The 12-month increase was 6.4% in Montreal, 5.3% in Ottawa, 5.1% in Vancouver and 3.9% in Toronto. Only in Calgary were prices down from a year earlier, by 3.4%.
Data for February from the Canadian Real Estate Association show generally balanced conditions in major urban markets.
Relative to the average, conditions in Calgary were better for buyers and conditions in Vancouver better for sellers, a finding consistent with the movement of the Teranet–National Bank indices for these markets.
The Toronto market is no longer tightening. Between January 17, when the federal minister of finance announced that the maximum amortization period for an insured mortgage would be reduced to 30 years from 35 years, and March 18, the announced effective date, the resale market may have been influenced by the prospect of this change.
According to Pinsonneault, market conditions are currently balanced in Canada.
However the situation differs among regions. Conditions look somewhat tight in Vancouver and Toronto, while they are still favourable to buyers in Calgary.
While house prices are high relative to income and rents, and a reduction in the maximum amortization period for insured mortgages from 35 to 30 years took effect recently, “there is no perspective of a sudden and severe price correction in Canada, given the fact that employment is well into expansion territory,” said Pinsonneault.
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