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A "For Sale" sign is posted outside of at Toronto townhome Tuesday Oct. 25, 2011.

Tim Fraser

Canadian home resale prices dropped in December from November, the second straight monthly decline, as small drops in high-priced Toronto and Vancouver provided a further sign of a cooling market, the Teranet-National Bank Composite House Price Index showed on Wednesday.

The index, which measures price changes for repeat sales of single-family homes, showed overall prices slid 0.2 per cent in December from November, but were up 6.8 per cent from a year earlier.

Prices in five of 11 metropolitan markets surveyed declined. The heavily weighted Vancouver and Toronto markets both reported a 0.3-per-cent drop. Victoria, British Columbia, showed the biggest decrease, falling 0.8 per cent. The biggest increase, 0.9 per cent, was in Halifax.

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Ten of 14 economists and strategists surveyed last week in Reuters' first poll on the Canadian housing sector said they expected home prices to stall with a mere 0.1-per-cent climb this year, and the same increase in 2013.

December marked the first month since September 2010, however, in which all 11 metropolitan markets showed prices up from 12 months earlier. Five markets exceeded the average 6.8 per cent increase, including Toronto (up 9.9 per cent), Winnipeg (8.7 per cent), Vancouver (8.2 per cent), Hamilton, Ontario, (7.7 per cent), and Quebec City (7.7 per cent).

Teranet said the latest January data from the Canadian Real Estate Association showed "generally balanced" conditions in major urban markets, although there was increased tightening in Vancouver, Victoria, Toronto, Hamilton, Winnipeg and Halifax.

The index tracks home prices over time for repeat sales, so properties with at least two sales are required in the calculations. The report does not provide actual prices.

The Teranet index is similar to the U.S. S&P/Case-Shiller home price index. It lags other home resales data by about six weeks.

Experts have been pushing for a slowdown in the housing sector for months, pointing to high real estate prices at a time when household debt levels have hit record highs.

In last week's Reuters poll, 10 of 14 economists and strategists surveyed answered "yes" when asked if they thought Ottawa would tighten mortgage rules within the next 12 months.

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Earlier this month, Canada Mortgage and Housing Corp (CMHC) forecast the average home price will rise in each of the next two years, but said housing starts and sales of existing homes will be little changed over the same period.

The market has been sustained by ultra-low interest rates since the financial crisis began in 2008, and the Bank of Canada is widely expected to keep its main policy rate at its current 1 percent target well into 2013.

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