* New home prices rise less than expected in Dec
* Prices flat in 12 cities, up in 7, down in 2
* Recent data suggests housing market is cooling
By Louise Egan
OTTAWA, Feb 9 The pace of growth in new
home prices in Canada slowed in December to 0.1 percent compared
with 0.3 percent in November, Statistics Canada said on
Thursday, in another sign the hot housing market may be cooling.
Markets had expected a 0.2 percent price gain in the month,
according to the median forecast in a Reuters survey.
Compared with a year earlier, the new housing price index
rose 2.5 percent in December, the same rate as in the previous
Strong demand for housing helped propel Canada's economy to
quick recovery following a 2008 recession. But continued high
prices and heavy borrowing amid rock-bottom mortgage rates has
policymakers worried about overheating.
They fear eventual interest rate hikes and a decline in
prices could push many consumers into bankruptcy.
Bank of Canada Senior Deputy Governor Tiff Macklem said this
week the central bank remains concerned about high household
debt levels, which are approaching levels seen in the United
States before the 2008-09 crash, although he noted there had
been some slowing in credit growth.
The central bank cites household debt as the biggest
home-grown threat to the financial system.
Still, almost nobody is predicting a U.S.-style meltdown and
recent data suggest a soft landing for the housing market.
Data earlier this week showed Canadian housing
starts declined in January from December, although construction
remained stronger than expected.
Also, the value of building permits taken out by contractors
in December soared to a 4-1/2 year high, skewed by the condo
market in Ontario.
The report on Thursday showed new home prices eased 0.2
percent in Vancouver for the third straight monthly decline in
one of the country's most costly real estate markets. Vancouver
prices were 0.3 percent lower than the same month a year
The Toronto and Oshawa region and Montreal were the biggest
contributors to the monthly rise in the price index, Statscan
said. Prices in Toronto-Oshawa jumped 0.4 percent for a yearly
increase of 6.3 percent.
Overall, prices held steady in 12 metropolitan regions in
December from November, rose in seven and fell in two.