Home prices start to falter

Canadian housing prices continue to gain when measured against the lows experienced during the economic downturn of 2009, but month-to-month comparisons show a deceleration in the rate of increases, a report released Wednesday shows.

Housing prices in February were 9.9-per-cent higher in February than a year earlier, but the increase over January's prices was just 0.2 per cent, according to the Teranet-National Bank national composite house price index.

"Month-over-month gains have recently decelerated considerably," says Marc Pinsonneault, senior economist with National Bank Financial Group. "The 0.2-per-cent February rise in the composite index was the smallest in the 10 months since it began climbing. In two of the six markets surveyed, prices were down from the month before."

The year-over-year increases should continue to be dramatic through April, when the index reached its bottom point, suggests Pinsonneault, noting that the index has already risen 11.7 per cent from April 2009.

The index measures prices of resale homes collected from public land registries in six metropolitan areas.

Toronto housing prices were largely responsible for the strong gain of 16.2 per cent from the low of April 2009, followed by Vancouver, where the prices are up 14.1 per cent over May 2009.

February home prices in Ottawa were one-per-cent lower than in January, and Calgary's prices fell 0.4 per cent, the second monthly decline in a row, while increases in other areas measured for the index were the smallest since the market started rebounding.

"This development is consistent with a general loosening of market conditions across the country," said Pinsonneault.

"For some months now, homes have been coming on the market faster than they have been selling."

(Source: Financial Post/Vancouver Province)