Canada housing prices bounce higher but no crash seen
Canadian housing prices climbed to a record high in August, according to a price index released on Thursday that suggested the property market, long the country’s biggest engine of economic growth, remains strong but not frothy.
Home prices rose in August from what was already a record high in July, but the annual price increase remained subdued, the Teranet-National Bank Composite House Price Index showed.
The index, which measures price changes for repeat sales of single-family homes, showed prices rose 0.6 percent in August from a month earlier, below the seasonal norm.
Prices rose just 2.3 percent from a year earlier, a slight acceleration from July. The annualized gains for the last five months have been the smallest since November 2009, and well below the U.S. equivalent, which was up 12 percent in June.
But the head of investment for Canada’s largest insurance company doesn’t seem too excited about investing in Canadian housing right now. He calls this “dead cat bounce” …
House Prices Set For Significant Decline: Sun Life Exec
Sadiq Adatia, investment chief for Sun Life, told a conference in New York this week he expects Canadian house prices to fall 10 to 15 per cent as mortgage rates climb.
“I don’t think the demand is going to be there for housing,” Adatia told the Bloomberg Canadian Fixed-Income Conference, as reported by Bloomberg News.
Adatia’s comments come just as numerous market observers have declared an end to the relatively mild housing slump that began last year, at least in most markets. Home sales and average house prices have both begun to climb after softening through 2012.
But Adatia described this as a “dead cat bounce” — a Wall Street term meaning a brief recovery in the price of a declining asset.