* Prices up 3.6 on year, 10th month of deceleration
* Vancouver, Victoria lead the price decline
By Andrea Hopkins
TORONTO, Oct 24 (Reuters) - Home prices dipped in September from August and year-over-year price gains slowed for a 10th straight month in another sign that Canada’s housing market is cooling, 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 September from a month earlier, the third September drop over the past 13 years.
“The other two (September declines) were in 2008, as Canada was entering recession, and during the correction of 2010,” Teranet noted in its report.
The index was up 3.6 percent from a year earlier, for a 10th consecutive month of deceleration in 12-month inflation.
“Today’s print further underscores the moderation in Canada’s housing market,” Mazen Issa, Canada Macro Strategist at TD Securities, said in a research note.
The report is the latest in a string of data suggesting that an extended Canadian upswing in house sales and prices is coming to an end.
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.
The long run-up in Canadian house prices and low supply in some markets had sparked concern a housing bubble was forming. The federal government has tightened mortgage lending rules four times in four years to try to prevent borrowers from taking on too much debt to buy into the market.
Those tighter lending rules have been offset by historically low interest rates, which are expected to stay low into 2013.
“Though we expect that tougher lending rules will help to slow housing demand, the accommodative interest rate backdrop may provide support after a 3-6 month adjustment period to the new rules,” Issa said.
The report showed prices dropped in September from August in six of the 11 metropolitan markets surveyed, led by a 1.3 percent drop in Victoria and a 1.2 percent drop in Vancouver. Vancouver, which had the hottest market last year, is now rated a buyer’s market, according to the Real Estate Board of Greater Vancouver.
Other cities saw monthly price declines as well. Prices dropped 0.8 percent in Ottawa-Gatineau, 0.6 percent in Montreal, 0.2 percent in Quebec City, and 0.7 percent in Edmonton.
But prices continued to rise in a few markets. They rose 0.5 percent in Calgary and Halifax, 0.4 percent in Winnipeg, 0.3 percent in Hamilton and 0.1 percent in Toronto.
Year-on-year prices dropped 2.6 percent in Victoria and 1.4 percent in Vancouver, but were higher in all of the other markets. Toronto prices were 7.8 percent higher than a year earlier, while prices were up 8.0 percent in Halifax, 6.9 percent in Hamilton, 6.3 percent in Winnipeg, 3.8 percent in Montreal and Quebec City, 2.5 percent in Ottawa, and 2.2 percent in Calgary and 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.