Canadian resale home prices were up 4.7 per cent across Canada in March, according to Teranet, with only two cities – Winnipeg and Ottawa-Gatineau — reporting a drop in prices compared to March 2014.
The Teranet housing index showed prices rose an average of 0.3 per cent in the month, with eight of the 11 metropolitan areas surveyed marking rising prices.
The figures mark the strong beginning to the spring house-buying season, with the months between March and May traditionally seeing the largest number of home sales.
This spring consumers are benefiting from low mortgage rates and competition for the mortgage business.
Last week, Meridien, Ontario's largest credit uniton, offered an 18-month fixed term mortgage rate of 1.49 per cent, the lowest in living memory. Variable rate mortgages start at around 1.95 per cent, according to RateSpy
At the end of March, BMO dropped its fixed five-year rate to 2.79 per cent, prompting TD Bank to match those terms and kicking off a rate war among the big banks.
But cheaper mortgages may be helping to boost home prices, especially in markets with tight supply such as Toronto, Vancouver and Hamilton, which lead in year over year price rises for resale homes. In Hamilton, prices were up 8.4 per cent, in Toronto, 7.6 per cent, and in Vancouver, 5.3 per cent.
© CBC Calgary's real estate market is reminiscent of 2006, says a local real estate agent.
Even Calgary house prices are 4.4 per cent higher than a year ago and up 0.2 per cent on the month, despite layoffs in the oil patch which had driven prices down earlier in the year. However, price acceleration in Calgary has decelerated from the nine per cent average seen last year.
More declines ahead
TD Bank analyst Admir Kolaj said the deceleration in home price growth seen in the last four months has ebbed, in part because of lower rates. But he expects prices will continue to moderate later in the year.
"While price growth in Calgary and Edmonton have remained in positive territory, we still expect home prices in commodity-dependent housing markets such as Alberta, Saskatchewan and Newfoundland and Labrador to decline by three to severn per cent over the course of 2015," he said in a note to investors.
Meanwhile, prices in Ontario and British Columbia should stay strong, he said.
The wild card is what the Bank of Canada does with interest rates — if there is another rate cut, that could mean even lower mortgage rates and even more Canadians rushing to get into the market while mortgages are cheap.
Source: MSN Money/CBC, 04/14/2015