OTTAWA Dec 14 Canadian home prices rose in
November from a month earlier as prices continued to soar in
Toronto, the biggest market, helping to drive household debt to
another record, separate reports showed on Wednesday.
Surging home prices and consumer debt have sparked fears the
gains could end in a U.S.-style housing collapse, but there are
signs of cooling real estate markets outside of Toronto as the
government takes more steps to rein in borrowing.
Prices for existing homes rose 0.2 percent in November from
a month earlier as seven of the 11 cities surveyed in the
Teranet-National Bank Composite House Price Index saw increases,
offsetting a second consecutive decline in Vancouver.
Years of low interest rates since the financial crisis, as
well as rising home prices, have encouraged Canadians to take on
more debt, but the government and regulators have tightened
mortgage lending rules repeatedly in recent years in a bid to
prevent risky lending.
The house price index, which encompasses repeat sales of
single-family homes, showed prices rose 1.1 percent in Toronto
and 1.4 percent in nearby Hamilton in November, while Vancouver
prices fell 1.3 percent.
The Vancouver housing market was already cooling when the
provincial government imposed a 15 percent tax on foreign buyers
in August to counter a backlash against wealthy foreigners,
mostly from mainland China, who were blamed for driving up
Nationally, prices are up 11.9 percent from a year earlier,
with Vancouver prices up 19.3 percent and Toronto up 18.5
A separate report by Statistics Canada showed household debt
as a share of income hit another record in the third quarter as
the pace of borrowing outstripped wage gains.
"However, we might start to see the ratio flatten out a bit
in 2017 as the Vancouver housing market has cooled notably due
to the foreign buyers' tax, and the new mortgage rule should
dampen activity modestly in 2017," Benjamin Reitzes, senior
economist at BMO Capital Markets, said in a research note.
The ratio of debt to disposable income rose to 166.9 percent
from an adjusted 166.4 percent in the second quarter. That meant
Canadians owed C$1.67 for every dollar of disposable income they
The Bank of Canada has flagged the high level of debt as a
potential vulnerability for the financial system and is expected
to update its view in a report on Thursday.
($1 = $1.3101 Canadian)
(Additional reporting by Leah Schnurr Editing by W Simon)