OTTAWA – Canadian home price gains accelerated in December, rising 0.8% from November, as buyers scrambled to act before anticipated rate hikes and resale supply remained constrained, data showed on Wednesday.
Prices rose in eight of the 11 major Canadian markets that make up the Teranet-National Bank Composite House Price Index, which tracks repeat sales of single-family homes.
“Some people who secured advantageous interest rates have probably brought forward transactions,” said Daren King, an economist with National Bank of Canada, in a note.
“In addition, the lack of supply on the market is certainly putting upward pressure on prices, which should continue in the short term,” he said.
Investors are raising bets the Bank of Canada will start hiking rates next week, despite worries that stricter restrictions to tackle surging COVID-19 cases will slice into economic growth.
Home sales inched up 0.2% in December from November, while active listings fell to very low levels, Canada’s realtors said on Monday.
Housing starts, meanwhile, fell 22% in December, but remain high in historic terms, official data showed on Tuesday. BMO Capital Markets economist Shelly Kaushik said the 6-month average was comparable to building booms in the 1970s and 1980s.
“Canada’s housing market remains extremely strong, and price strength is largely driven by sky-high demand rather than lack of supply,” she said, in a note.
The Teranet gains were led by Victoria, British Columbia at 2.1% and Halifax, Nova Scotia at 1.9%. Prices fell in Winnipeg, Manitoba, Ottawa-Gatineau, and Edmonton, Alberta.
On an annual basis, the index rose by 15.5%, picking up speed after a few months of deceleration. Halifax led the annual index at 30.7%, while Hamilton registered a 25.4% gain.
(Reporting by Julie Gordon; Editing by Sandra Maler)