Wednesday, August 31, 2011

Canadian House Prices: +1.7% in June

The Teranet National Bank House Price index came out this morning.  As the headline shows, the Canadian market continues its unstoppable price rise.  Year of year the price increase at 4.5% (up only 0.1%).  June's "winner" was Toronto which is up 2% for the month.  One notable aspect is that Calgary's house price are still 10.9% below their 2007 peak -- a combination of high oil price and an absolute shortage of housing (professionals were clogging hotel rooms as temporary housing -- while their condo were being built).  Overall, the Canadian housing situation remains worrying for the Bank of Canada.  Clearly this kind of price acceleration is unsustainable, is leading to excess consumption and indebtedness.

BTW Montreal and Vancouver lead the race for YoY price increase with 5.9% and 7% respectively.

Note:  There is some thought that these June number were inflated by the March deadline for revised terms for max mortgage terms.  Sometime closing on a house takes longer than anticipated.  Then again there is no proof that this is the case, this is the third month where this argument has been used



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