* Prices up from May in all 11 markets surveyed
* Year-over-year appreciation slowing
* Economist sees limits to upside
By Andrea Hopkins
TORONTO, July 12 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, the Teranet-National Bank Composite House
Price Index showed on Friday.
The index, which measures price changes for repeat sales of
single-family homes, showed overall prices rose 1.0 percent in
June from a month earlier and were up in every major Canadian
But the index was up just 1.8 percent 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," Mazen Issa, Canada Macro
Strategist at TD Securities, said in a research note.
Canada's red-hot market in early 2012 led many observers to
fear a housing bubble was forming, particularly as condo
builders ramped up development in major cities including Toronto
and Vancouver. While some economists still predict a U.S.-style
crash, the spring recovery in sales has led some to believe
Canada has achieved a soft landing.
Issa said the bounceback in activity in recent months will
be limited on the upside as the supply of newly completed but
unoccupied units 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 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 percent
rise in Hamilton and a 1.4 percent rise in Toronto and Calgary.
Smaller rises included a 0.9 percent gain in Ottawa, Halifax and
Vancouver, a 0.8 percent rise in Winnipeg, a 0.6 percent rise in
Montreal, a 0.5 percent rise in Quebec City, a 0.3 percent rise
in Edmonton and a 0.1 percent gain in Victoria.
Year-on-year prices dropped in two cities -- Victoria, where
they were down 4.6 percent from June 2012, and Vancouver, where
they fell 2.8 percent. British Columbia had the hottest housing
market going into the downturn.
Compared with June 2012, prices were 7.0 percent higher in
Hamilton, 5.6 percent higher in Quebec City, 5.5 percent higher
in Calgary, 3.9 percent higher in Winnipeg, 3.6 percent higher
in Toronto, 3.0 percent higher in Edmonton, 2.3 percent higher
in Halifax, 1.4 percent higher in Montreal and 1.1 percent
higher in Ottawa.