April 16, 2012 / 3:20 PM / in 6 years

UPDATE 1-Canada home prices fall in March, sales up-CREA

* Home prices fall 0.5 pct in March from year earlier
    * Vancouver-area price declines impact national avg
    * Prices in Toronto rise 10.5 pct
    * Home sales up 2.5 pct in March from Feb

    By Jon Cook	
    TORONTO, April 16 (Reuters) - Canadian home prices fell in
March from year-ago levels even as existing home sales activity
picked up, with a cooling of the once-hot Vancouver market
offsetting big price gains in Toronto and steady increases
    A report on Monday from the Canadian Real Estate Association
showed the average residential home price in March was C$369,677
($370,600), down 0.5 percent from the same period last year. The
figures are not seasonally adjusted.	
    But the broad number masked big differences between cities
and regions.	
    The average selling price in Vancouver, Canada's most
expensive major market, fell 3.1 percent from a year earlier to
C$761,742. Prices in the nearby Fraser Valley area tumbled
nearly 10 percent.	
    But prices in Toronto, which has seen a boom in condominium
construction, jumped 10.5 percent in March from a year earlier.	
    "The slight decline in the national average price points to
a tug of war between Toronto and Vancouver," Gregory Klump, the
industry group's chief economist, said in a statement.	
    Klump added that national prices in 2011 had been pushed
higher by "record level high-end home sales in some of
Vancouver's priciest neighborhoods."	
    The report also showed existing home sales climbed 2.5
percent in March from February on a seasonally adjusted basis.
But the increase, unadjusted, was up just 1.6 percent from
year-earlier levels. This represented the lowest yearly growth
rate since April 2011.	
    "While it is difficult to see in the monthly data, there is
a sense that the housing market is gradually slowing," David
Tulk, chief Canada macro strategist at TD Securities wrote in a
research note.	
    "The dynamics of this report show a maturation of the
housing market cycle in Vancouver which is likely to be repeated
in Toronto over the coming year. Outside of these two markets,
the rest of the national market is still holding in reasonably
    Tulk added that gradually rising Canadian interest rates
over the next two years should help slow the market further.	
    The news should provide some relief to the Bank of Canada,
which has warned that rising household debt levels, in many
cases the result of large mortgages, are the biggest domestic
threat to the economy.	
    Canada's housing sector never experienced the subprime
mortgage boom and bust that drove the United States into
recession. And a post-crisis housing market rally, triggered by
record low borrowing costs, played a key role in driving the
    But Bank of Canada Governor Mark Carney and Finance Minister
Jim Flaherty have both expressed concern about the housing boom,
with Flaherty tightening mortgage rules several times to try to
cool the market.
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