Canadian home prices rise 1pc in June
Annual rise smallest in more than three years, giving weight to the 'soft landing' theory
Canadian home prices rose in June from May as a seasonal uptick in sales pushed prices to an all-time high - but the annual price increase was the smallest in more than three years, according to the Teranet-National Bank Composite House Price Index.
But the index was up just 1.8 per cent from a year earlier, marking the smallest 12-month gain since November 2009.
The data adds to evidence that the Canadian housing market is recovering after slowing dramatically in mid-2012, when the government tightened mortgage lending rules in a bid to prevent a housing bubble.
"The June Teranet HPI report points to a nascent recovery in the housing market which is entirely consistent with our previous analysis that tighter mortgage regulations only have a temporary impact on housing," said Mazen Issa from TD Securities.
Canada's red-hot market early last year led many observers to fear a housing bubble was forming, particularly as condo builders increased development in major cities including Toronto and Vancouver.
While some economists still predict a US-style crash, the spring recovery in sales has led some to believe Canada has achieved a soft landing.
Issa said the bounce back in activity in recent months would be limited as the supply of newly completed but unoccupied homes hit the market.
"Moreover, stretched household balance sheets will limit mortgage credit growth and contribute to lower demand for real estate.
"Finally, the back-up in bond yields since mid-May has begun to filter into the mortgage market and if sustained, it will impact on affordability over the medium term," he said.
The Teranet data showed prices rose in June from May in all 11 of the metropolitan markets surveyed, led by a 1.8 per cent rise in Hamilton and up 1.4 per cent in Toronto and Calgary.
Smaller rises included a 0.9 per cent gain in Ottawa, Halifax and Vancouver, a 0.8 per cent increase in Winnipeg, a 0.6 per cent rise in Montreal, a 0.5 per cent lift in Quebec City, up 0.3 per cent in Edmonton and a 0.1 per cent gain in Victoria.
Year-on-year prices dropped in two cities - Victoria, where they were down 4.6 per cent from June last year, and Vancouver, where they fell 2.8 per cent. British Columbia had the hottest housing market going into the downturn.
Compared with June last year, prices were 7 per cent higher in Hamilton, up 5.6 per cent in Quebec city, 5.5 per cent higher in Calgary and up 3.9 per cent in Winnipeg.
There was a 3.6 per cent rise in Toronto, 3 per cent in Edmonton, 2.3 per cent in Halifax, 1.4 per cent in Montreal and 1.1 per cent in Ottawa.