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For only the second time in 20 years, Canadian home prices fell from February to March, at least according to one closely watched price index, but Canada’s sixth-largest bank isn’t concerned about a collapse.
“Home prices are adjusting to the recent rise in interest rates and stricter mortgage qualification rules. But price weakness does not mean collapse,” says writes National Bank Senior Economist Marc Pinsonneault.
The economist’s comments were published alongside the results from latest Teranet-National Bank House, which showed home prices declined 0.3 percent in March compared to February.
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The only other time that happened in the index’s 20-year history was March 2009, when the country was in the grips of a recession, National Bank notes.
The monthly decline was the continuation of a trend that has seen prices decline for the past six months.
On a year-over-year basis, prices remained up 1.5 percent but 1.7 percent off the peak reached in September 2018.
However, there are bright spots in Canada’s biggest markets, even if they’re currently cooling.
“In Toronto, Canada’s largest real estate market, apartment prices have been up for 17 consecutive months, while prices of other types of dwellings declined only 1.4% over the last 6 months,” Pinsonneault notes.
Toronto prices, including houses and condos, tumbled 0.29 percent from February but were 3.7 percent above year-ago levels.
Vancouver prices slipped another 0.5 percent from February and are now 2.1 percent lower than they were a year ago and 4.3 percent away from the July 2018 all-time high. But Pinsonneault expects the bleeding to stop in the Vancouver market.
“In Vancouver, the most expensive market, employment growing 2.9% in Q1 on a… [year-over-year] basis should limit further home price declines,” he writes.
And two markets are currently peaking: Montreal and Halifax.
Montreal home prices have been on the rise for 49 months in a row, according to the Quebec Professional Association of Real Estate Brokers, and the index pegged its monthly growth at 0.1 percent and annual increase at 5.46 percent.
Meantime, Halifax has seen interest from foreign homebuyers surge, and its prices climbed 0.7 percent month-over-month and 3 percent annually.