Analysis:Toronto Area Slows Canada Hsg Price Inflation in June>

--Canada New Housing Price Index +0.2% M/M, +3.9% Y/Y

By Yali N'Diaye

     OTTAWA (MNI) - Canada monthly new house price growth slowed in June 

as Southern Ontario "paused", Statistics Canada reported Thursday, as 

the new housing price index rose 0.2% from May. 

     The slowdown in Southern Ontario occurred after the province 

introduced a Fair Housing Plan on April 20 aiming at cooling housing 

market conditions in one of Canada's tightest and most expensive 

markets. 

     The Bank of Canada expects such measures, combined with tighter 

mortgage rules at the national level, to contribute to a slowdown in 

months ahead. Higher interest rates, as solid economic growth is 

expected to continue, are also cited by analysts as a key reason for 

anticipating a housing slowdown as they contribute to deteriorate 

housing affordability along with elevated prices. 

     On a 12-month basis, however, the NHPI increased 3.9%, edging up 

from 3.8% in June, with Vancouver recording its largest year-over-year 

increase (6.2%) since June 2010. 

     While house price inflations slowed to 8.5% in Toronto from 9.0% in 

May, the area still led the 12-month price gains in June. 

     In addition, the more comprehensive Teranet-National Bank National 

Composite House Price Index rose 2.6% on the month and a record 14.2% 

year-over-year, led by Toronto, with a record 29.3% 12-month gain in a 

15th consecutive price growth acceleration. 

     House only prices rose 0.4% on the month and 3.7% year-over-year, 

following gains of 0.5% and 3.2%, respectively, in May. 

     Land only prices were unchanged on the month, after five 

consecutive months of increases. Land prices rose 4.6% from June 2016, 

after a 4.7% increase in May. 

     The monthly national slowdown came after a growth peak of 0.8% 

reached in April, which was the largest gain since May 2016. It was 

followed by a still healthy 0.7% advance in May. 

     In the second quarter, new house prices rose 1.6% in Canada, after 

a 0.5% increase in the first quarter. Price growth in Ontario picked up 

to 2.7% from 1.1%, including a 3.3% gain in Toronto, following a 1.0% 

increase in the first quarter. 

     In British Columbia, prices rose 3.1% in the second quarter - 

including a 3.6% gain in Vancouver - after remaining flat in the first 

quarter. 

     However, both Ontario and British Columbia recorded slower price 

gains in June from May, as prices edged up 0.1% in Ontario after rising 

0.8% in May, while they were up 1.3% in British Columbia after a 1.9% 

gain in May. 

     Whether the slowdown in Southern Ontario is marking a turnaround 

remains to be seen. 

     Canada Mortgage and Housing Corporation said Wednesday that in 

July, "total housing starts were still trending close to the average 

level seen so far this year" in Toronto. 

     Nationally, Canada housing starts rose to a seasonally adjusted 

annual rate of 222,324 units in July from 212,948 in June. 

     In addition, CMHC is maintaining its assessment of "strong evidence 

of problematic conditions" in Canada's housing market, stressing strong 

evidence of overvaluation in Toronto and Vancouver in particular, 

compared to "moderate" nationally. 

--MNI Ottawa Bureau; email: yali.ndiaye@marketnews.com

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