Canadian Press
The Teranet-National Bank National Composite House Price Index released Wednesday shows that home prices fell 0.4% in September from the previous month.
If sales continue to decline, a cumulative price drop of around five per cent is likely in a soft-landing scenario for the Canadian home resale marketThe drop was spread across six of the 11 Canadian cities in the study, with Victoria facing the steepest decline of 1.3%.
Prices fell in Vancouver, down 1.2%, and Ottawa, down 0.8%.
Other Canadian cities showing weakness were Montreal (down 0.6%), Edmonton (down 0.7%) and Victoria (1.3%).
On the upside was Toronto, rising 0.1%, while both Calgary and Halifax rose 0.5%. Hamilton increased 0.3% in September from August.
On a national level, home prices are still 3.6% higher than they were a year earlier.
The report offered further evidence of the summertime slowdown of the domestic economy, as well as the impact of mortgage regulations that were introduced by Finance Minister Jim Flaherty in July.
Under the new rules, the maximum amortization period for government-insured mortgages would be reduced to 25 years from 30 years.
National Bank senior economist Marc Pinsonneault said in a report that the regulation changes “undoubtedly contributed to cool the market.”
But he also noted that third-quarter home sales for the cities in the survey fell eight per cent from the previous three month period, which could be a harbinger for lower house prices next year.
“Price declines have occurred outside recessions when sales dropped a few quarters in a row, even if market conditions were overall balanced. We could see a repeat of that,” Pinsonneault said.
“In our view, if sales continue to decline, a cumulative price drop of around five per cent is likely in a soft-landing scenario for the Canadian home resale market.”
The Canadian Press
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