UPDATE 2-Canada home prices rise 5.2 pct in April

Fri May 25, 2012 11:51am EDT

* Strongest gains seen in Toronto

* Finance minister welcomes cooler Vancouver market

By Andrea Hopkins

TORONTO, May 25 (Reuters) - Canadian home prices climbed 5.2 percent in April from a year earlier, boosted by strong gains in the Toronto market as well as increases in Vancouver and Calgary, the Canadian Real Estate Association (CREA) said on Friday.

The rise in the industry group's home price index for April compared with a 5.1 percent year-on-year gain in March.

Toronto once again posted the biggest increase with prices jumping 7.9 percent from a year earlier. Prices were up 4.0 percent in Calgary, 3.7 percent in Vancouver, and 2.3 percent in Montreal.

The rise in Vancouver compared with a 5.3 percent increase in March. Canadian Finance Minister Jim Flaherty told reporters he welcomed signs that the Vancouver market, Canada's most expensive, is cooling.

"There's also some moderation in the housing market, which is the major source of indebtedness for most people in Canada - the mortgages on their homes; some moderation on the West Coast in Vancouver," Flaherty said. "I'm not seeing that kind of moderation in the Toronto market yet."

Canada did not experience the housing market crash that drove the United States and other Western countries into recession. Since the recession, the Canadian market has rallied on record low borrowing costs.

Bank of Canada Governor Mark Carney and Flaherty have both expressed concern about the housing boom, with Flaherty tightening mortgage rules several times to try to cool the market.

The long upward march in home prices in Toronto has spurred talk of a real estate bubble, but some economists have said the prospect of higher interest rates in the next year or two could prompt a modest correction.

"Canadian home price gains are generally expected to moderate, but there are a few hot spots where prices are being fueled by some very strong housing market fundamentals," Wayne Moen, CREA's president, said in a statement.

"Toronto has less than two months of supply compared to six months nationally, so it ranks among the tightest of Canadian housing markets," he said.

CREA's index, which monitors housing prices in five major urban markets, does not show actual prices.

Single-family home prices drove April's overall gains, rising 6.4 percent from a year earlier, while apartment unit prices were up 3.6 percent and townhouse prices climbed 2.7 percent.

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