MNI DATA ANALYSIS: Canada New House Prices Slowdown Continues>

--March New Housing Price Index +2.4% Y/Y, Smallest Gain Since Apr 2016

By Yali N'Diaye

     OTTAWA (MNI) - Canada new housing price growth downward trend 

extended into March, when prices rose 2.4% year-over-year, the smallest 

increase since April 2016, Statistics Canada reported Thursday. 

     Price appreciation has been slowing since the summer of 2017. 

     New house prices were flat on the month after edging down 0.2% in 

February. 

     Over the first quarter, prices declined 0.1% after rising 0.4% in 

the fourth quarter 2017. 

     Data showed the combination of stricter underwriting mortgage rules 

since January and higher interest rates are having the desired effect of 

cooling down price appreciation, especially  in Toronto, which, along 

with Vancouver, are among the most expensive markets on the Bank of 

Canada's radar screen. 

     The weaker housing starts reported Tuesday combined with slower 

price gains play into the BOC's scenario of a diminishing contribution 

of housing to growth. 

     Nationwide house only prices were flat on the month and up 2.5% 

year-over-year, the lowest rate since April 2016. 

     Land only prices edged down 0.1% on the month for a 12-month gain 

of 2.4%. 

     --TORONTO WEAKENING CONTINUES 

     The overall picture was mixed in March, with 13 metropolitan areas 

recording higher prices and 14 recording flat or lower prices. 

     Toronto and Vancouver remain key markets monitored by the BOC, 

which is still in the process of assessing the impact of the combination 

of tighter monetary and macroprudential policies on the housing market. 

     March marked an end to the diverging trend between the two areas, 

although it remains to be seen whether it was the beginning of a 

convergence or just a short-lived pause in the diverging trajectory. 

     Prices contracted 0.3% on the month in Toronto, leading to a 

year-over-year gain of 2.3%, the smallest since April 2015. 

     Builders cited both lower selling prices and "unfavorable" market 

conditions. 

     --VANCOUVER FINALLY SLOWS 

     There had yet to be evidence of a slowdown in the Vancouver area, 

but the month of March finally reflected a cooldown in the pace of price 

appreciation for the first time since February 2017. 

     Prices in Vancouver were flat in March for the third consecutive 

month, and edged up 0.1% in the first quarter after rising 0.8% in the 

fourth quarter. 

     Prices increased 8.4% year-over-year, the smallest gain since 

October 2017, and the first slowdown in a year. 

     In British Columbia, where new housing rules were introduced in 

late February, prices edged up 0.1% in the first quarter after rising 

0.8% the previous quarter. 

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

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