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Home Prices Slip Again, First Four-Month Slide Since Recession

House prices in Canada slipped 0.4 per cent in December from a month earlier, according to a fresh reading today, marking the fourth decline in a row. But values remain "stretched" in some parts of the market, according to the Bank of Canada.

That four-month slide is the first since the recession, according to the Teranet-National Bank home price index.

Year over year, however, prices are up by 3.1 per cent in 11 centres monitored, though that's the slowest pace in three years and marks more than a year of slower growth.

"The differential between Canadian and U.S. annual home price inflation continues to narrow with the U.S. now outperforming Canada for the first time in six and a half years," said senior economist Mar Pinsonneault of National Bank of Canada.

"The price decline in Canada in December was the fourth in a row, a first outside recession since the inception of the composite index ... At the national level, home sales in Canada have started to decrease last May. The cumulative decline up to December is 12.5 per cent."

The monthly decline was steepest in Vancouver, where prices fell by 1 per cent. Vancouver also stands alone as the only city with an annual decline, of 2 per cent.

Prices slipped 0.9 per cent on the month in Calgary, but were up 4.1 per cent on the year. In Toronto, prices slipped 0.3 per cent from November, but were up by a strong 6.3 per cent on the year.

Other centres: Edmonton, down 0.1 per cent and up 1.5 per cent; Halifax, down 0.7 per cent and up 5.6 per cent; Hamilton, up 0.9 per cent and 7.4 per cent; Montreal, down 0.3 per cent and up 3 per cent; Ottawa, down 0.1 per cent and up 2.6 per cent; Quebec City, up 1.7 per cent and 4.2 per cent; Victoria, up 0.9 per cent and flat; Winnipeg, down 0.7 per cent and up 3.9 per cent.

"Within the Canada-wide trend there is considerable variation among the 11 metropolitan markets surveyed," said Mr. Pinsonneault.

"Up through September, the cross-country trend was replicated in the Vancouver market, but in December there were only two markets with continuous runs of deceleration: Toronto (eight months) and Winnipeg (six months)."

The index differs from prices reported monthly by the Canadian Real Estate Association.

Canada's housing market has been cooling rapidly since Finance Minister Jim Flaherty brought in his fourth round of changes to mortgage rules in an attempt to tame the market amid record consumer debt burdens, though the central bank said today it's seeing signs that Canadians are heeding the warnings.

"Sales of existing homes have fallen, partly because of measures taken by federal authorities," the Bank of Canada said today.

"Housing starts have also declined from very high levels, decreasing from roughly 225,000 units [at an annual rate] through much of 2012 to about 200,000 units in November and December," it said in its monetary policy report.

"However, home building still remains above demographic demand, which is estimated at around 185,000. Ongoing strong rates of construction, particularly of multiple-unit dwellings in some regions, continue to point to overbuilding ... Despite some softening in house prices, valuations in some segments of the housing market remain stretched."




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