Canada house prices reach record high

Calgary only major city to buck trend as weak oil market undermines drop in mortgage rates

PUBLISHED : Wednesday, 17 June, 2015, 12:00am
UPDATED : Wednesday, 17 June, 2015, 12:00am

Canadian home prices rose last month to a record high despite a drop in Calgary as weak oil prices continued to hurt demand in the country's energy heartland, the Teranet-National Bank composite house price index showed.

The index, which measures price changes for repeat sales of single-family homes, showed national home prices rose 0.9 per cent from April.

Prices were up 4.6 per cent from a year earlier, an acceleration from April, and set a record nationally even as several key markets have passed their peak.

Prices rose in 10 of 11 major markets. Calgary bucked the trend, falling 3.3 per cent from April in the largest monthly drop recorded for the city.

While analysts have long expected Canada's housing boom to slow, a drop in mortgage rates early in the year has supported continued demand except in resource-dependent Calgary, where a huge drop in oil prices since last year has hurt the economy.

Leading the monthly gains were Halifax at 2.3 per cent, Montreal and Toronto at 1.6 per cent, Ottawa at 1.5 per cent and Vancouver at 1.3 per cent.

The gain in Ottawa came after a run of eight declines in nine months.

"In the other markets east of Toronto, namely Montreal, Quebec City and Halifax, prices have risen rather sharply over the past three months after downward corrections that lasted from four to seven months depending on the case," the report said. "This suggests that these markets are stimulated by historically low mortgage rates."

From a year earlier, only two markets showed price declines - Calgary with 1.4 per cent and Ottawa with 0.9 per cent. Both had peaked last year.

By contrast, Toronto, Hamilton, Quebec City and Vancouver remain at record price levels. Compared with a year earlier, prices were up 7.6 per cent in Toronto, 6.2 per cent in Vancouver and Hamilton, 4.8 per cent in Edmonton and Victoria, and 2.9 per cent in Quebec City.