Canadian home prices ticked back up to a record high in December, thanks entirely to Edmonton, Vancouver and Toronto, according to the Teranet-National Bank house price index.
The 0.1-per-cent rise in home prices in December reversed a 0.1-per-cent decline in November, and returned the index to its all-time high.
But the majority of the 11 cities that the index tracks have seen prices edge down in recent months. Winnipeg, Calgary, Ottawa-Gatineau, Quebec City, Montreal, Hamilton, Halifax and Vancouver each saw prices decrease from November to December.
December was the sixth month in a row that Montreal failed to see a price increase, and the fifth month in a row in Quebec City, National Bank of Canada economist Marc Pinsonneault said in a research note. Ottawa-Gatineau has seen prices fall for four months in a row and Victoria for three, he added.
But Vancouver, the city that saw the steepest market correction in the past two years, saw its prices rebound to a new high. Toronto’s prices rose 0.4 per cent from November, the first time they’ve risen in four months, and are now almost back up to the peak that they reached last August. Edmonton posted its first price increase in five months, up 0.6 per cent.
All told, national home prices were 3.8 per cent higher in December than they had been a year earlier. That’s an acceleration from the 3.4 per cent year-over-year increase in November, and is stronger than the 3.1 per cent increase in prices during 2012.
But Mr. Pinsonneault notes that the improvement from 2012 comes solely from Calgary, Vancouver and Toronto. Excluding those three cities, last year’s price increase would have been 1.2 per cent.
Given that higher mortgage rates are eroding housing affordability, Mr. Pinsonneault is predicting that house price increases will barely cover CPI inflation during 2014, about 1.5 per cent.
Calgary has seen its prices rise 6.5 per cent in the past year according to this index, Toronto 4.9 per cent, Vancouver 5.5 per cent and Winnipeg 3.4 per cent. The only city that has seen a price decrease over the past year is Victoria, where prices have dropped by four per cent. But a number of cities, namely Quebec, Ottawa, Montreal and Halifax, saw prices tick up just a bit.
Many economists say they are surprised by how well Canadian home prices have held up in the wake of the market downturn that impacted much of the country from the summer of 2012 until this past spring. Prices tend to lag sales, and economists expected the slump to translate into more downwards pressure on prices.
“Prices have been much stronger than we anticipated them to be,” Toronto-Dominion Bank real estate economist Diana Petramala said earlier this month.
The Canadian Real Estate Association, which represents the bulk of real estate agents in Canada, will release December’s average prices as well as its latest home price index numbers Wednesday (averages tend to be skewed by changes in the size or types or locations of homes that are selling).
But the Calgary Real Estate Board recently said that the benchmark price of a single family home in the Calgary area has risen to $472,200, up 8.6 per cent from December of 2012.
The benchmark in Vancouver is $603,400, up 2.1 per cent from a year earlier.
The average price of homes that sold over the Multiple Listing Service in the Toronto area during December was $520,398, up by 8.9 per cent from the average selling price in December, 2012. And the average selling price in Toronto for all of 2013 was $523,036, up 5.2 per cent from the average in 2012.