TORONTO Jan 14 (Reuters) - Canadian home resale prices edged up in December and returned the Teranet-National Bank Composite House Price Index to a record high after a decline the month before.
The index, which measures price changes for repeat sales of single-family homes, showed on Tuesday that national prices rose 0.1 percent last month from November. In November, they fell 0.1 percent from October.
The housing market cooled in 2012 after Canada's government tightened mortgage rules due to worries that low interest rates were prompting Canadians to take on too much debt.
While the sector bounced back in 2013, some signs of a slowdown began to emerge in the final months of the year, with building permits and housing starts falling and prices leveling off amid speculation about rising mortgage rates and oversupply.
In December, resale prices were up 3.8 percent from a year earlier after November's 3.4 percent year-on-year gain. The Teranet index does not show actual prices.
For 2013 as a whole, the Teranet price index decelerated to a 2.6 percent average gain, down from a 4.8 percent rise in 2012 and a 5.0 percent surge in 2011, noted Mazen Issa, senior Canada macro strategist at TD Securities in Toronto.
"Despite the uptrend in home price appreciation in the latter half of the year, we expect home prices to decelerate in the year ahead, albeit modestly as monetary policy is expected to stay accommodative for an extensive period of time," Issa said.
In October, the Bank of Canada dropped its policy tightening bias, increasing expectations that official interest rates will remain at historically low levels for longer than had been thought. Still, mortgage rates are expected to rise gradually as the U.S. Federal Reserve scales back its stimulative measures and financial conditions gradually tighten around the world.
That is expected to dampen the rise in house prices in 2014, and most economists say the market will have a soft landing from its boom years rather than a U.S.-style crash.
But some are concerned that any big drop in house prices would leave many indebted households under water.
The Teranet data showed that while overall prices rose in the month, prices fell in December from the month before in eight of 11 cities. Gains included a 0.6 percent rise in Vancouver and Edmonton and a 0.4 percent rise in Toronto.
Prices fell 1.7 percent in Victoria, 1.2 percent in Halifax, 0.6 percent in Hamilton and Montreal, 0.4 percent in Quebec, 0.3 percent in Calgary and Ottawa, and 0.1 percent in Winnipeg.
Year-over-year price gains were seen in every market but Victoria, where they were down 4.0 percent from December 2012.
Gains on the year were led by a 6.5 percent rise in Calgary, a 5.5 percent rise in Vancouver and a 4.9 percent rise in Toronto. Prices were up 3.7 percent in Hamilton, 3.6 percent in Edmonton, 3.4 percent in Winnipeg, 1.5 percent in Quebec, 1.0 percent in Ottawa and 0.4 percent in Halifax and Montreal.