MNI DATA ANALYSIS:Canada House Prices Down, Household Debt Up>

By Yali N'Diaye

     OTTAWA (MNI) - Data released Thursday by Statistics Canada showed 

further housing market weakness in January, while household 

debt-to-disposable income reached a record high at the end of 2018. 

     The overall picture further reinforced the case for the Bank of 

Canada to remain on hold as it assesses the health of the housing sector 

while still concerned about elevated household debt. 

     - NEW HOUSING PRICES DECLINE 

     Canada's new housing prices edged down 0.1% in January, both 

month-to-month and year-over-year, led by drops in the country's largest 

markets. 

     The monthly decrease was the first since February 2018, while the 

12-month decline was the first since December 2009. 

     House only prices were down 0.1% on the month and 0.4% from January 

2018. Land only prices were flat from December and up 0.4% on the year. 

     - LARGE MARKETS LEAD PRICE DROP 

     Prices in Toronto, which represents 29% of the index, fell 0.2% on 

the month and 1.5% year-over-year, the largest 12-month drop since 

September 1996. 

     Overall, prices in Ontario were down 0.1% both on the month and 

year-over-year. 

     In Vancouver, the second largest metropolitan area, representing 

nearly 14% of the index, prices edged down 0.1% on the month and fell 

0.3% from January 2018, the largest such decrease since March 2015. 

     At the provincial level, prices were down 0.1% on the month in 

British Columbia, for a 0.2% decrease on the year. 

     In oil-rich Alberta, prices fell 0.1% on the month and 0.8% on the 

year. Monthly prices were down 0.1% in Edmonton and 0.2% in Calgary. On 

a 12-month basis, prices fell 0.5% in the former and 1.1% in Calgary. 

     Lower prices were due to lower negotiated selling prices as well as 

poor market conditions, the agency said. 

     The more comprehensive Teranet-National Bank National Composite 

House Price Index indicated further downward pressure in February. The 

index fell 0.4% on the month, the largest such drop outside of the 2009 

recession. 

     - HOUSEHOLD DEBT INCREASES 

     Meanwhile, household credit market debt-to-disposable income 

reached a record high 178.5% in the fourth quarter 2018, leaving the 

Canadian economy vulnerable to higher interest rates. 

     The household debt service ratio rose to 14.9%, the highest since 

the fourth quarter 2007. 

     Households borrowed C$21.2 billion in the fourth quarter. Demand 

for consumer credit and non-mortgage loans decreased, while demand for 

mortgage loans rose C$2.3 billion. 

     During the quarter, the value of non-financial assets fell 2.2%, 

led by natural resources and residential real estate. 

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

[TOPICS: MACDS$,M$C$$$]