Canada house price index gains in June on strong housing market conditions

Canada house price index witnessed gains in June, following strong housing market conditions in most districts, which put upward pressure on prices, with builders also reporting that higher material costs were continuing to have an important impact.

The Canadian new housing price index rose 0.1 percent in June following the strong 0.7 percent advance for May and was slightly weaker than the expected monthly increase of 0.2 percent. There was also a slowdown in the annual increase to 2.5 percent from 2.7 percent previously.

House prices rose 3.4 percent over the year after a 0.1 percent monthly gain, while land only rose 0.7 percent over the year. There was continued regional divergence with 3 of the 21 metropolitan areas reporting lower prices over the month with prices unchanged in a further 8.

The Toronto and Oshawa metropolitan authority led gains on an annual basis at 6.2 percent from 6.4 percent in May with a 0.5 percent monthly increase in prices, while the annual increase in Vancouver accelerated slightly to 5.2 percent from 5.1 percent previously. Over the year, 7 of the 21 metropolitan areas reported an annual decline in prices, again led by Saskatoon.

Meanwhile, the Bank of Canada will continue to monitor the situation closely over the next few months with the next financial stability report due in December. The bank will still be uneasy over financial stability risks and excessive borrowing.