As prices doubled in decade, housing was hard to beat
Economists believe new mortgage rules and the inevitable rise in interest rates will keep the market in check. And, as Globe and Mail real estate writer Steve Ladurantaye reported earlier this month, price gains will probably recede beginning in April.
There's gold in them bricks
House prices in Canada rose 0.4 per cent in January, according to a fresh reading today, but it was a mixed bag across the country.
According to the Teranet-National Bank price index, prices rose 0.9 per cent in Vancouver, 0.5 per cent in Toronto, 0.4 per cent in Halifax and 0.3 per cent in Montreal, but dipped 0.6 per cent in Ottawa and 1 per cent in Calgary. It marked the second month in a row of gains, after three consecutive dips.
"January’s price increase confirms that the correction experienced towards the end of 2010 was short-lived," said senior economist Marc Pinsonneault at National Bank Financial.
"In fact, market correction is now a local phenomenon (Ottawa and Calgary). At the national level, January’s prices were still 1 per cent below those in August, 2010, but they were 5.5 per cent above their pre-recession peak, in sharp contrast to the U.S. where prices are down 30 per cent from the peak of four years ago."
Economists believe new mortgage rules and the inevitable rise in interest rates will keep the market in check. And, as Globe and Mail real estate writer Steve Ladurantaye reported earlier this month, price gains will probably recede beginning in April.
Still, house prices in Canada have gained more than 100 per cent over the past decade, added Scotia Capital economists Derek Holt and Gorica Djeric.
"Barring a massive rate shock or sharp erosion in jobs, I don’t see a large price correction," Mr. Holt said in a research note.
"A modest one in a soft landing, yes, but the forces of leverage-reversal that amplified the downside risks in the U.S. do not operate in the same manner within Canada. That said, I do view this as a nation-wide problem and not one just confined to a handful of markets, as every province’s house prices have risen by about 80 per cent to 150 per cent over the past decade. Other than gold, the retail investor’s returns on tax-sheltered primary residences have been tough for alternative investments to compete against."