Canada's Housing Bubble

Jan 27, 2010 Derek Abma Financial Post

Teranet’s year-over-year national measure showed resale house prices were up 2.6%.

Ottawa -- A measure of home prices in major Canadian markets was up in November compared to a year earlier.

The Teranet-National Bank home index, released Wednesday, was up 2.6% on an annual basis for November. This was the second successive month that prices have risen on an annual basis. The two gains come after prices were down on a year-over-year basis for 10 straight months. The latest gains leave the overall index just 0.1% shy of its August 2008 peak.

The index has been up on a monthly basis seven consecutive times, and rose 0.8% in November. It had increased 1.2% or better in each of the previous six months.

Vancouver skewed the month-to-month figures for November with its own 1.9% rise. Without Vancouver, the gain in this composite index would have been just 0.5%.

Vancouver's prices were up 1% from a year earlier, though they remain down 2.3% from their June 2008 peak, authors of the report said.

In Toronto, prices were up 0.6% for the month and 4.6% from a year earlier. Montreal's home prices were ahead 0.1% on a monthly basis in November and 3.8% year-over-year.

Calgary was the only city among the six in the index where prices remained below year-earlier levels. Calgary home prices were down 2.1% from a year before but ahead 0.6% for the month.

"On balance, this report provides further evidence to support the general view that the recovery in the Canadian housing market is gaining further momentum, and suggests that the recent gains in home prices are being sustained," Millan Mulraine, economics strategist with TD Securities, said in a research note.

The Teranet-National Bank index is based on prices in land registries of homes that have been sold at least twice.

Canwest News Service

TABLE

Home prices percentage gains/declines by city in November

Month-to-month/year-to-year

Calgary 0.6/-2.1

Halifax 0.4/2.2

Montreal 0.1/3.8

Ottawa 0.4/4.8

Toronto 0.6/4.6

Vancouver 1.9/1.0

National composite 0.8/2.6

Source: Teranet-National Bank house price index