Home prices up 10% a year in August

Posted on 01. Nov, 2010 by in News

Great news for those who are already invested in Real Estate and also a nudge in the right direction for those who are thinking about it to take action.

Toronto— The Canadian Press
Published Wednesday, Oct. 27, 2010 1:49PM EDT
Canadian home prices rose just 0.2 per cent in August from July in the latest sign that prices are moderating across the country, according to the latest Teranet-National Bank composite home price index.

“For a second consecutive month, prices did not rise from the month before in all six markets [studied],” authors of the index said.

On a monthly basis, prices were down in Calgary and Vancouver, but rose in Toronto, Montreal, Halifax and Ottawa.

The index, which compiles home price changes in six major Canadian cities using data collected from public land registries, did find that Canadian home prices were up 10 per cent in August from a year earlier.

Toronto and Vancouver both showed a 12 per cent, year-over-year price gain in August, Ottawa 10.7 per cent, Montreal 7.7 per cent, Halifax 6.8 per cent and Calgary 5 per cent.

But most of that was a result of gains in the first half.

Home prices quickly inflated at the beginning of the year as buyers rushed into the market amid fears of higher interest rates, tighter mortgage rules and a new harmonized sales tax in B.C. and Ontario. However, the market began to falter in the spring, usually the busiest time of the year.

There have been other recent indicators the housing market is cooling.

A Royal LePage survey published earlier this month said housing prices weakened along with sales in the third quarter and increases in housing prices slowed to a more normal 5 per cent rate year over year.

And the Canadian Real Estate Association said in its monthly report that home prices in September were little changed from last year at $331,089.

However, even as the market cools, prices continue to hover around record highs, sparking fears in some circles that Canada could find itself in a housing bubble.

Bank of Canada Governor Mark Carney repeated his warning Tuesday that Canadian homes may be overvalued and that home prices drop could more sharply than expected. If that happens, he said, it would exacerbate growing debt burdens that many households are facing.

The Economist’s latest survey of global home prices claims that Canadian real estate is overvalued by 23.9 per cent. The survey uses the current ratio of house prices to rent compared with traditional ratios to determine fair value.

Canada’s real estate market had been on the rebound over much of the past year after sales dried up in late 2008 and hit a multi-year low in January, 2009.

The housing market’s sudden plunge was sparked by a credit crunch that developed in the U.S. housing and lending industries, and gradually spread across the globe, causing a worldwide recession in the late summer and early fall of 2009.

The domestic real estate market has been much quicker to recover than its American counterpart, in part because of a more stable banking industry, historically low interest rates and improving consumer confidence.

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3 Responses to “Home prices up 10% a year in August”

  1. [...] This post was mentioned on Twitter by John Carmine and Brandon Foreman, Ivan van Niekerk. Ivan van Niekerk said: Home prices up 10% a year in August | Invicta Property Investments http://bit.ly/czDYGi [...]

  2. Grant Hammond

    02. Nov, 2010

    All of the economic data I have gathered really shows a 4 year period of price stagnation before we can realistically see a steady appreciation in price across the board. That being said, there will be micro housing economies within every city that do well in the near future.

  3. CNA Training

    06. Dec, 2010

    Nice site, nice and easy on the eyes and great content too.

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