Analyst sees ‘reason for optimism’ as house prices rise

Thursday, July 30th, 2009


OTTAWA — Canadian housing prices rose in May by 0.7 per cent — the first time since October that they didn’t decline month-over-month, according to a national index released Wednesday.

However, May’s increase was not enough to stop the downward trend in year-over-year prices.

The Teranet-National Bank home price index fell 6.9 per cent compared to May 2008, the sixth-straight 12-month decline, and a jump from the 6.7-per-cent year-over-year drop posted in April.

The index is now down 8.9 per cent from its peak in August 2008, said Marc Pinsonneault, senior economist with the National Bank Financial Group.

“This series is not seasonally adjusted [due to the short data span], but a quick back-of-the-envelope calculation suggests that prices may have risen by a more modest 0.2 per cent month-over-month if historical patterns were to be considered,” cautioned senior TD Securities economist Millan Mulraine in a note.

He added that he saw some reason for optimism.

“On the whole, this report does offer some hope that the correction in Canadian home prices may be nearing an end, further corroborating the other housing sector indicators that are conveying a similar message,” Mulraine said.

Prices fell for the 11th straight month in Vancouver and Calgary. Vancouver prices were down 11.8 per cent from May 2008 — a decline of 12 per cent from the city’s June 2008 peak — while Calgary‘s fell 12.2 per cent and are now down 15.2 per cent from their peak in August 2007.

The other four cities included in the index all registered monthly increases — 1.3 per cent in Halifax, 1.5 per cent in Montreal, 0.7 per cent in Ottawa and two per cent in Toronto — though prices in Ottawa and Toronto were down on a year-to-year basis.

It was the third monthly rise in succession for Halifax and Montreal.

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