* Prices up 3.3 pct from year ago, deceleration trend
* Prices down in November from October in 10 of 11 markets
* Calgary records the only monthly price gain
By Andrea Hopkins
TORONTO, Dec 19 Canadian home prices dipped in
November from October while year-over-year price gains slowed
for the 12th straight month as Canada's housing market continued
to cool, the Teranet-National Bank Composite House Price Index
showed on Wednesday.
The index, which measures price changes for repeat sales of
single-family homes, showed overall prices fell 0.4 percent in
November from a month earlier, the third consecutive monthly
"For the first time since February 2009, when the recession
was in full swing, prices were down from the month before in 10
of the 11 metropolitan markets surveyed," with Calgary the only
city to escape a drop, Teranet noted in its report.
The index was up 3.3 percent from a year earlier, the 12th
consecutive month of deceleration in 12-month inflation.
The report is the latest in a string of data suggesting that
an extended Canadian upswing in house sales and prices has come
to an end, but activity varies widely by region.
Canada's housing market avoided a meltdown in the wake of
the financial crisis in 2009, h elped by the country's
co nservative lending standards. Ul tra-low interest rates then
helped fuel a post-crisis boom.
Canadian housing is now swooning just as the U.S. market is
showing some signs of a long-awaited r ecovery.
Canada 's Conservative government tightened mortgage lending
rules to make it harder for homebuyers to take on too much debt
in a bid to slow the nation's red-hot housing market. The
changes, which took effect in July, were the fourth such move in
CRASH OR SOFT LANDING?
With cooling evident in Vancouver and several other major
cities, speculation has turned to whether the slowdown will be a
soft landing or a crash. Tighter mortgage lending rules have put
the brakes on some segments of the market, but interest rates
are expected to remain at historically low levels through 2013,
which may help temper the slowdown.
Mazen Issa, Canada Macro Strategist at TD Securities, said
he expects the correction in house prices to continue in the
months ahead, but noted the housing market tends to bounce back
after adjusting for changes in lending conditions.
"The correction in Vancouver is already well advanced and we
believe Toronto - which has been the market holding up the
national index - will soon follow. Overall we expect to see
prices to correct by 10-15 percent over the next 2-3 years,"
Issa said in a research note.
"As we have noted before, after an initial adjustment
period, the housing market tends to reaccelerate. This risk is
nontrivial given the very accommodative interest backdrop, one
which is expected to persist through most of next year," he
The report showed prices dropped in November from October in
10 of the 11 metropolitan markets surveyed, led a 0.9 percent
decline in Victoria, Halifax and Edmonton, a 0.7 percent decline
in Winnipeg and a 0.6 percent decline in Vancouver.
Other cities saw monthly price declines as well. Prices
dropped 0.5 percent in Ottawa, 0.4 percent in Montreal, 0.3
percent in Toronto and Hamilton, and 0.1 percent in Quebec City.
The only market that recorded a price increase in the month
was Calgary, where prices were up 0.4 percent from October.
Year-on-year prices dropped 1.7 percent in Victoria and 1.4
percent in Vancouver, but were higher in all of the other
markets. Toronto prices were 6.3 percent higher than a year
earlier, while prices were up 7.3 percent in Halifax, 7.2
percent in Hamilton, 5.7 percent in Calgary, 5.2 percent in
Winnipeg, 2.8 percent in Montreal, 2.7 percent in Quebec City,
2.2 percent in Ottawa, and 1.6 percent in Edmonton.
The index, which is similar to the U.S. S&P/Case-Shiller home
price index, tracks repeat sale prices, so properties with at
least two sales are required in the calculations. It lags other
home resale data by about six weeks.