MNI DATA ANALYSIS:Cdn May New Hse Prices Stable M/M, Slow Y/Y>

By Yali N'Diaye

     OTTAWA (MNI) - Canada new housing prices stabilized further in May, 

as they were unchanged for a third consecutive month, but continued to 

slow down on a 12-month basis, especially in Toronto, data from 

Statistics Canada showed Thursday. 

     Prices were up 0.9% from May 2017, the smallest 12-month gain since 

February 2010, extending a slowing trend since last summer, when price 

growth peaked at 3.9%. 

     House only prices were also flat on the month, bringing down the 

year-over-year rate to 1.0%, the smallest since January 2010. 

     Land only prices edged up 0.1% from April, for a 12-month gain of 

0.7%, the smallest since August 2016. 

     Tighter macro prudential rules and higher mortgage rates at the 

national level, combined with measures in Ontario and British Columbia 

to cool down the local markets have weighed on the housing sector. 

     The Bank of Canada, which raised its main policy rate to 1.50% 

Wednesday from 1.25%, continues to monitor the response of the economy, 

especially the housing market, to higher interest rates. 

     "Data on resale activity and housing starts suggest that the 

housing market is beginning to stabilize," the BOC said in its July 

Monetary Policy Report Wednesday. It expects new construction spending 

to slow. In fact, since January, housing starts have fallen 36.2% in 

Toronto compared with the same period in 2017. 

     --VANCOUVER, TORONTO FLAT M/M 

     On a monthly basis, prices were stable in 10 metropolitan areas, 

including Vancouver and Toronto. 

     For Vancouver, May marked the fifth consecutive month of price 

stability.  

     In Toronto, prices had been declining every month since January, so 

May's flat performance marked an improvement. 

     Monthly prices were also unchanged at the provincial level for both 

British Columbia and Ontario. 

     --YEAR-OVER-YEAR SLOWDOWN CONTINUES 

     However, on a 12-month basis, price growth continued to slow down, 

with the 0.9% advance marking the first time the national growth rate 

fell below 1.0% since February 2010. 

     In Toronto, prices fell 1.3% from a year before, the largest 

decline since February 2010, following a 0.3% contraction in April. At 

the provincial level, prices rose 0.3% in Ontario, the smallest increase 

since October 2009. 

     In British Columbia, prices grew 4.4% year-over-year, the smallest 

gain since April 2017. 

     --TERANET PRICE INDEX 

     Going forward, prices could turn around on a monthly basis. 

     Teranet-National Bank reported Thursday that their more 

comprehensive National Composite House Price Index rose 0.9% in June, 

making up the ground lost in the second half of last year, with data 

suggesting tight conditions for the condominium market. 

     That being said, the monthly price increase in Toronto was the 

smallest since 2008 for a month of June, the report said, and it was the 

fourth-smallest since 2001 in Vancouver for a month of June. 

     In addition, the slowdown continued in June on a 12-month basis. 

     The composite index rose 2.9% year-over-year, the smallest gain 

since October 2013 and a 12th consecutive deceleration from the record 

12-month gain of 14.2% last June. 

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

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