By Mario Toneguzzi, Calgary Herald
House price growth in Calgary on a year-over-year basis was behind the rest of the country in August.
The Teranet-National Bank House Price Index, which regularly surveys six Canadian metropolitan areas, said that in August Calgary saw house price growth of only five per cent compared with a year ago. On a monthly basis, prices dropped by 0.5 per cent from July.
The index, which was released Wednesday, is estimated by tracking observed or registered home prices over time using data collected from public land registries. All dwellings that have been sold at least twice are considered in the calculation of the index.
Toronto led the country with year-over-year price growth of 12.5 per cent followed by Vancouver (11.8 per cent), Ottawa (10.7 per cent), Montreal (7.7 per cent) and Halifax (6.8 per cent). The national average was 10.4 per cent.
In Canada, home prices are now 6.6 per cent above their pre-recession peak, a sharp contrast to the United States where prices are down 29 per cent from their peak four years ago, said Marc Pinsonneault, of National Bank Financial Group.
“Prices are likely to fluctuate without tendency over the next few years. At the national level, current market conditions, close to the boundary between balanced market and buyers’ market, herald a deceleration in home price deflation,” he said.
“Also, house prices are undoubtedly high, and affordability rests on historically low mortgage rates. People will realize that rates are due to go up sooner or later. When that happens, preference for renting instead of buying should increase. This should reduce the pressure on house prices.”
On a monthly basis, Ottawa led the nation with 1.4 per cent growth followed by Halifax (0.9 per cent), Montreal (0.5 per cent) and Toronto (0.4 per cent). Vancouver prices declined by 0.4 per cent. The national average was 0.2 per cent. It was the 16th consecutive month of gains.
“If the recent trend of growth in existing home sales and decline in the supply of homes listed on the market is maintained, it should keep a floor under home prices going forward,” said TD Bank Financial Group economist Shahrzad Mobasher Fard. “Prospects for any acceleration in price growth is, however, expected to be limited as factors such as the decelerating pace of the economy, high debt loads and weak growth in personal disposable income limit consumers’ propensity to spend.”