* Existing home sales up 1.4 pct in Feb from Jan
* Sales jump 8.6 pct from year earlier
* National avg home price up 2 pct year over year
* Separate report shows household debt ratio eased in Q4
* Debt-to-income ratio dips to 150.6 pct
By Jon Cook
TORONTO, March 15 Canadian home sales
climbed in February after a soft January and price gains picked
up speed, confirming the country's housing market remains
buoyant and a potential concern for bubble-wary policymakers.
February existing home sales in Canada grew by 1.4
percent from a month earlier, Canadian Real Estate Association
data showed on Thursday.
Sales had fallen 4.5 percent in January from December.
The industry group said sales were up 8.6 percent from a
year earlier, compared with a 4 percent gain in January. The
annual numbers were not seasonally adjusted.
The national average home price rose 2 percent on a
year-over-year basis to C$372,763 ($375,400) in February,
compared with a 1.2 percent gain in January.
"The monthly jump will raise eyebrows in Ottawa, where
policymakers are growing more concerned about the risks of an
overshoot in home prices (and related mortgage debt) that would
set Canada up for a harder landing down the road," CIBC World
Markets Chief Economist Avery Shenfeld said in a research note.
"That increases the odds of a policy response at
some point this year if home price momentum continues, with
measures aimed directly at housing and mortgages rather than
rate hikes being the likely weapon under consideration."
Some economists and policymakers have expressed
concern that the housing market is entering bubble territory in
certain cities. Toronto and Vancouver are most frequently
Finance Minister Jim Flaherty has tightened mortgage rules
several times in a bid to keep the market from overheating. A
Reuters poll last month showed a majority of forecasters expect
Flaherty to tighten rules again this year.
Canada's housing market has been supported by record low
mortgage rates offered by most major lenders, including recent
high-profile deals from Bank of Montreal and Royal Bank
Not all economists were worried by the latest
numbers, with some noting that activity and price gains have
slowed from their post-recession surge.
"When you look at the longer term trend, it's still pointing
towards a gradual moderation," said Mazen Issa, macro strategist
at TD Securities.
Issa said the housing market is unlikely to suffer a severe
correction unless the Bank of Canada aggressively hikes its main
policy rate, now at 1 percent. The central bank is not expected
to move until next year
Issa added that rate increases would likely have to be done
gradually in order not to shock the economy.
"Once rates begin to go up again you have to wonder whether
households will be able to service that debt," he said.
HOUSEHOLD DEBT RATIO EASES
Flaherty and Bank of Canada Governor Mark Carney
have both warned repeatedly about soaring household debt levels,
cautioning Canadians to prepare for an era of higher rates.
But a separate report out Thursday suggested the problem has
Statistics Canada said the ratio of household credit market
debt - which includes mortgages, consumer credit and loans -
fell to 150.6 percent of income in the final quarter of last
year from a record 151.9 percent in the third quarter.
Canadians continued to increase their debt load in the
period to C$1.6 trillion from C$1.58 trillion in the previous
quarter, but their personal disposable income grew at a faster
pace, Statscan said.
National net worth increased in the fourth quarter by 0.8
percent to C$6.6 trillion, due to higher non-financial assets,
and household net worth per capita increased to C$182,100 from