Canada new housing prices rise in January, lifted by Toronto

A real estate for sale sign is pictured in front of a home in Vancouver, British Columbia, Canada, September 22, 2016. REUTERS/Ben Nelms/File Photo

OTTAWA (Reuters) - Canadian new home prices edged up at the start of the year, driven again by higher prices in the hot Toronto market, data from Statistics Canada showed on Thursday.

Prices rose 0.1 percent in January, keeping pace with December’s increase. On a year-over-year basis, prices climbed 3.1 percent. The new housing price index excludes apartments and condominiums, which account for about one-third of new housing.

The major city of Toronto was the main contributor, rising 0.2 percent amid higher land prices. The rising cost of buying a home in Toronto in recent years has prompted some economists to fear a bubble may be forming.

Other cities in Ontario also saw prices rise in January, including a 1.0 percent increase in the Kitchener and Waterloo area. Overall, prices were up in 14 of the 27 cities covered in the survey, while 7 saw a decline and 6 were unchanged.

Vancouver was one of the laggards, down 0.1 percent, though prices were up 3.6 percent compared to the year before. Housing activity in the once red-hot market began to cool last year, even before the provincial government implemented a tax on foreign homebuyers in the city.

Tighter mortgage lending rules put in place by the government last year are anticipated to rein in Canada’s housing market, which has been robust since the financial crisis in the midst of low interest rates.

But solid data earlier this week, including an increase in February housing starts, suggests the country’s long housing boom continues to defy expectations of a slowdown.

Reporting by Leah Schnurr; Editing by Bernadette Baum