Home prices keep rising, but contractions lie ahead

Thursday, July 1st, 2010


Home prices in some of Canada’s biggest cities rose 0.8 per cent in April, according to the latest Teranet-National Bank house-price index released Wednesday.

That followed a 0.3-per-cent rise for March, and marked the 12th-straight month that prices have risen.

“At the national level, April continues the best string of consecutive monthly price increases since September 2006,” Marc Pinsonneault, economist with National Bank Financial, wrote in a report.

“Home prices are now 2.9 per cent above their recession peak, a situation that contrasts with the one prevailing in the U.S., where prices are down 30 per cent from their peak.”

The index takes into account price trends in six urban areas. Prices in Vancouver were ahead 0.8 per cent, but in Halifax were up 1.9 per cent for the month; Montreal and Ottawa home prices were ahead 1.1 per cent, Toronto was up 0.6 per cent, and Calgary 0.8 per cent.

For the year, the national composite home-price index was up 12.9 per cent.

Looking forward, however, Francis Fong, economist at TD Economics, said: “As a result of lofty debt levels and eroding affordability, we expect the housing market to post outright contractions in both sales and prices through the latter half of 2010 and into 2011.”

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