Canada home prices rise as hot Toronto market offsets Vancouver

Canadian home prices continued to rise in the final months of 2016 as hot markets in Ontario offset the moderating effects of a foreign buyers tax in Vancouver, though most markets were past their peak, separate reports showed on Thursday. Prices of existing homes, the biggest slice of the real estate market, rose 0.3 percent in December as Toronto, the biggest market, and Victoria, saw hefty price gains while Vancouver prices fell again, the Teranet-National Bank Composite House Price Index showed.
The index, which measures price changes for repeat sales of single-family homes, showed national home prices surged 12.3 percent from a year earlier, the largest 12-month increase since 2010. A separate report from Statistics Canada showed prices for new homes - a smaller portion of the market than home resales - inched up 0.2 percent in November from October amid price increases across much of Ontario.
Analysts polled by Reuters had predicted a 0.3 percent advance. Overall, prices climbed in 10 of the survey's 21 markets, fell in four and were unchanged in seven. The Teranet report showed Vancouver prices dropped 0.8 percent in the month, the third straight monthly decline after 21 months of gains, shaving a cumulative 2.8 percent from prices in three months.
The once-hot Vancouver market has cooled since the government imposed a foreign buyers tax in August 2016 in response to public perception that wealthy foreigners, mostly from mainland China, were pricing locals out of the market. Analysts have speculated that the tax, imposed only in Vancouver, could drive foreign investment to other cities, including nearby Victoria, or Toronto, Canada's hottest market.
Prices in both those cities climbed 1.2 percent in December. The government moved again in recent months to tighten mortgage lending rules to cool the market and prevent borrowers from taking on too much debt, the latest of steps taken over the last five years amid concerns about a potential housing bubble. The Teranet report showed national prices jumped 12.3 percent from December 2015, with the annual gain led by a 19.7 percent increase in Toronto, 17.7 percent in Victoria, 17.5 percent in Hamilton, and 17.0 percent in Vancouver. Toronto, nearby Hamilton, and Victoria all notched record high prices, but most of the other Canadian markets were well past their peak.