The average rental apartment vacancy rate in Canada’s 35 major centres increased to 2.8 per cent in October 2009 from 2.2 per cent in October 2008. The centres with the highest vacancy rates in 2009 were Windsor (13.0 per cent), Abbotsford (6.1 per cent), Peterborough (6.0 per cent), Calgary (5.3 per cent), and London (5.0 per cent). On the other hand, the major urban centres with the lowest vacancy rates were Regina (0.6 per cent), Québec (0.6 per cent), St. John’s (0.9 per cent), Winnipeg (1.1 per cent), Kingston (1.3 per cent), and Victoria (1.4 per cent).

Demand for rental housing in Canada decreased due to slower growth in youth employment and improved affordability of homeownership options. Rental construction and competition from the condominium market also added upward pressure on vacancy rates.

The highest average monthly rents for two-bedroom apartments in new and existing structures were in Vancouver ($1,169), Calgary ($1,099), Toronto ($1,096), and Ottawa ($1,028). The lowest average monthly rents for two-bedroom apartments in new and existing structures were in Saguenay ($518), Trois-Rivières ($520), and Sherbrooke ($553).

Year-over-year comparison of rents in new and existing structures can be slightly misleading because rents in newly-built structures tend to be higher than in existing buildings. However, by excluding new structures, we can get a better indication of actual rent increases paid by most tenants. The average rent for two-bedroom apartments in existing structures increased in all major centres. The largest rent increases in existing structures were recorded in Regina (10.2 per cent), Saskatoon (8.3 per cent),Victoria (5.0 per cent), and St. John’s (4.9 per cent). Overall, the average rent for two-bedroom apartments in existing structures across Canada’s 35 major centres increased by 2.3 per cent between October 2008 and October 2009.

CMHC’s October 2009 Rental Market Survey also covers condominium apartments offered for rent in Calgary, Edmonton, Montréal, Ottawa, Québec, Regina, Saskatoon, Toronto,Vancouver, and Victoria. In 2009, vacancy rates for rental condominium apartments were below two per cent in seven of the 10 centres surveyed. Rental condominium vacancy rates were the lowest in Toronto, Saskatoon, and Ottawa. However, Regina and Edmonton registered the highest vacancy rates for condominium apartments at 3.0 per cent and 3.1 per cent in 2009, respectively.

The survey showed that vacancy rates for rental condominium apartments in 2009 were lower than vacancy rates in the conventional rental market in Ottawa, Saskatoon,Vancouver, Toronto, Edmonton, and Calgary. The highest average monthly rents for two- bedroom condominium apartments were in Toronto ($1,487),Vancouver ($1,448), Calgary ($1,310), and Victoria ($1,223). All surveyed centres posted average monthly rents for two- bedroom condominium apartments that were higher than average monthly rents for two-bedroom private apartments in the conventional rental market in 2009.

The vacancy rate for private rental apartment buildings with three or more units in the St. Catharines- Niagara CMA (hereinafter Niagara) was above the national and historical averages. According to the CMHC’s Fall 2009 Rental Market Survey, the vacancy rate edged up to 4.4 per cent in 2009. This was above the 20-year average level of 3.5 per cent, and an increase of 0.1 percentage point from last year. Four main factors placed upward pressure on the vacancy rate. First, record low mortgage rates in combination with lower prices in the earlier part of the year translated into very affordable mortgage carrying costs. Many buyers, in particular first- time buyers, took advantage and moved out of rental accommodation and into home ownership. A comparison of average rents and mortgage carrying costs based on the mortgage terms chosen by most first-time buyers (i.e., maximum amortization period and the minimum down payment allowed) suggests that the gap between the two narrowed by more than 50 per cent in the first quarter of 2009.

Also, youth aged 15 to 24 are a key source of rental demand. Weaker employment among youth in this age group meant that some of them, after losing their jobs, moved back into their parents’ homes, or alternatively, postponed a decision to move out. Total employment for all age groups declined by around 11,000 people or 5.6 per cent when comparing the average level in the 12 months ending September 2009 to average level in the same period a year earlier.Youth employment declined by 4,500 people or 14 per cent, of which 2,900 in full- time positions and the rest in part- time jobs.

Finally, there were fewer international immigrants in 2009, due to the global economic slowdown. Since they traditionally tend to rent after landing in Canada, this implies that rental demand in 2009 was not as strong as in the previous years. Many international migrants find it difficult to settle in the region and land a job. Instead, they prefer to settle in major centres, such as the Greater Toronto Area, where they are more likely to find their first job and where there are established social networks.

The average rental apartment vacancy rate in Canada’s 35 major centres increased to 2.8 per cent in October 2009 from 2.2 per cent in October 2008, according to the Rental Market Survey released today by Canada Mortgage and Housing Corporation (CMHC).

“Demand for rental housing in Canada decreased due to slower growth in youth employment and improved affordability of homeownership options”, said Bob Dugan, Chief Economist at CMHC’s Market Analysis Centre. “Rental construction and competition from the condominium market also added upward pressure on vacancy rates.’

Between October 2008 and September 2009, 15,657 rental units and 45,655 condominium units were completed in Canada’s 35 major centres. Condominiums are a relatively inexpensive type of housing for renters moving to home ownership. Also, some condominium apartments are owned by investors who rent them out.

Provincial vacancy rates in October 2009 increased in eight out of ten provinces. The largest increases were in Alberta where the vacancy rate increased by 3 percentage points to 5.5 per cent and British Columbia where the vacancy rate rose by 1.8 percentage points to 2.8 per cent. Vacancy rates decreased by 0.1 of a percentage point in Newfoundland and Labrador to 1.0 per cent, and by 0.4 of a percentage point in Nova Scotia to 3.1 per cent.

The centres with the highest vacancy rates in 2009 were Windsor (13 per cent), Abbotsford (6.1 per cent), Peterborough (6.0 per cent), Calgary (5.3 per cent), and London (5.0 per cent). On the other hand, the major urban centres with the lowest vacancy rates were Regina (0.6 per cent), Québec (0.6 per cent), St. John’s (0.9 per cent), Winnipeg (1.1 per cent), Kingston (1.3 per cent), and Victoria (1.4 per cent).

The highest average monthly rents for two-bedroom apartments in new and existing structures were in Vancouver ($1,169), Calgary ($1,099), Toronto ($1,096), and Ottawa ($1,028). The lowest average monthly rents for two-bedroom apartments in new and existing structures were in Saguenay ($518), Trois-Rivières ($520), and Sherbrooke ($553).

Year-over-year comparison of rents in new and existing structures can be slightly misleading because rents in newly-built structures tend to be higher than in existing buildings. However, by excluding new structures, we can get a better indication of actual rent increases paid by most tenants. The average rent for two-bedroom apartments in existing structures increased in all major centres. The largest rent increases in existing structures were recorded in Regina (10.2 per cent), Saskatoon (8.3 per cent), Victoria (5.0 per cent), and St. John’s (4.9 per cent). Overall, the average rent for two-bedroom apartments in existing structures across Canada’s 35 major centres increased by 2.3 per cent between October 2008 and October 2009.

CMHC’s October 2009 Rental Market Survey also covers condominium apartments offered for rent in Calgary, Edmonton, Montréal, Ottawa, Québec, Regina, Saskatoon, Toronto, Vancouver, and Victoria. In 2009, vacancy rates for rental condominium apartments were below two per cent in seven of the 10 centres surveyed. Rental condominium vacancy rates were the lowest in Toronto, Saskatoon, and Ottawa. However, Regina and Edmonton registered the highest vacancy rates for condominium apartments at 3.0 per cent and 3.1 per cent in 2009, respectively.

The survey showed that vacancy rates for rental condominium apartments in 2009 were lower than vacancy rates in the conventional rental market in Ottawa, Saskatoon, Vancouver, Toronto, Edmonton, and Calgary. The highest average monthly rents for two-bedroom condominium apartments were in Toronto ($1,487), Vancouver ($1,448), Calgary ($1,310), and Victoria ($1,223). All surveyed centres posted average monthly rents for two-bedroom condominium apartments that were higher than average monthly rents for two-bedroom private apartments in the conventional rental market in 2009.

CMHC’s Rental Market Survey also gathers information on monthly rents in types of dwellings other than private apartments and condominium apartments, such as duplexes, and accessory apartments for 15 major centres.

The Rental Market Report for major centres also includes an affordability indicator for most centres. The rental affordability indicator is used to examine trends in rental affordability within a centre.

CMHC’s Rental Market Survey is conducted twice a year, in April and in October, to provide vacancy rate and rent information on privately initiated apartment structures containing at least three rental units. However, due to possible seasonal factors, the April and October results are not compared.

As Canada’s national housing agency, CMHC draws on more than 60 years of experience to help Canadians access a variety of quality, environmentally sustainable and affordable homes. CMHC also provides reliable, impartial and up-to-date housing market reports, analysis and knowledge to support and assist consumers and the housing industry in making vital decisions.

The new home market in the Greater Toronto Area (GTA) will see sales activity rise slightly this year in comparison to 2008. The low-rise housing segment will be credited for the increase in sales in 2009 while the high-rise sector will outperform in terms of sales growth next year. Total new home sales will reach 28,500 units this year and remain steady at 29,000 in 2010 — well below the annual average for the new millennium.

For the first time since 2006, low-rise homes will account for the majority of new home sales in the GTA in 2009 and 2010. New low rise home sales will rise by 37 percent this year to 17,000. Although this level is still well below the high reached in 2002, it represents a complete turnaround from last year when sales dropped by over 40 per cent. Low borrowing costs this year are a clear contributor to the rebound in low-rise sales, as is a lack of supply in the resale market. A rise in new listings in the resale market and a reduction in affordability next year will dampen demand for new single-detached homes in the second half of 2010. Total low-rise home sales will move lower in 2010 to 15,500 units — still above the 2008 level. Strong sales for singles in the first part of next year coupled with stable demand for less-expensive semi-detached and row houses throughout 2010 will provide some support for the low-rise segment.

A tougher selling environment for high-rise homes will lead to a sales decline of 23 percent this year to 11,500 units — the lowest level since 2003. More project launches, an improving employment situation for younger workers and a shift towards lower-priced housing types in the second half of next year will boost new high-rise sales in 2010 by 17 percent to 13,500 units. Construction delays and a heightened sense of uncertainty regarding new condominium projects this year has turned buyers away from pre- construction sales offices. At the same time, less project launches have created fewer new options for buyers. Faced with high levels of inventory relative to demand, developers have begun offering generous buyer incentives and reconfiguring remaining units to attract more sales centre traffic. Sales levels have responded and are now much higher than at the beginning of the year. Still, sales are down by over 40 percent in the year-to-date to August and even with further improvement will register an overall decline in 2009. However, current sales momentum will carry into 2010, leading to a much better performance for 2010.

Repairs will include the replacement of windows and balconies, installation of energy efficient lights and carbon monoxide sensors and the replacement of appliances in the following buildings:

* Les Centres d’Accueil Heritage at 33 Hahn Place, $1.1 million.
* Toronto Community Housing Corporation at 30 and 40 Teesdale Place, $2 million.
* Mimico Co-op at 1 Summerhill Road, $403,300.

The $3.5 million investment is part of a notional allocation of more than $220 million for the City of Toronto to repair and retrofit existing local social housing units over the next two years.

The funding was made available as a result of a $1.2 billion joint investment under the amended Canada – Ontario Affordable Housing Program Agreement, which includes funding through Canada’s Economic Action Plan and by the Government of Ontario. The federal and provincial governments are contributing equally to this overall investment.

Lois Brown, Member of Parliament for Newmarket – Aurora, on behalf of the Honourable Diane Finley, Minister of Human Resources and Skills Development Canada and Minister Responsible for Canada Mortgage and Housing Corporation (CMHC) and George Smitherman, Minister of Energy and Infrastructure and Member of Provincial Parliament for Toronto Centre, on behalf of the Honourable Jim Watson, Ontario Minister of Municipal Affairs and Housing, made the announcement today.

“This funding will improve the quality of life for residents by upgrading their homes and keeping them affordable,” said MP Brown. “These investments also benefit our communities by creating jobs and supporting the local economy.”

“These repairs are another step towards improving social housing in Toronto,” said MPP Smitherman. “This new funding will help ensure that people living in social housing have a safe and reliable place to live. Ontarians deserve nothing less.”

“This is very good news for the City of Toronto and is in keeping with our efforts to create a city that is liveable and prosperous for all residents,” said Toronto Mayor David Miller. “Through Council’s Housing Opportunities Toronto Action Plan, we will continue to work with Provincial and Federal partners in order to continue to upgrade and improve housing in the city.”

Ontario is moving quickly to invest a total of $704 million to repair eligible social housing across the province. In an effort to get shovels in the ground quickly, projects must be committed by the end of the fiscal years 2010 and 2011.

As stock markets around the world have taken a fall with the economic recession, one market that remains strong is Israeli real estate. The Park Hyatt Hotel was host to Israeli real estate firms including Azorim, Gindi Holdings, Dimri Building & Development, Pollock Real Estate and Ashdar Building Company a few weeks ago when they flew into Toronto to deliver a presentation to potential investors.

It was the first time they’d done so directly, according to Ainnat Lifshitz, director of marketing and sales of Bayit4U, the company that coordinated the event. Alongside the real estate developers were bank representatives and lawyers who “give a panoramic view of Israel and cover all aspects of real estate,” she said.

Residential properties in Israel were under the spotlight as they’ve performed well in recent months. According to Lifshitz, demand for homes in Israel was up 14.6 percent in April 2009, compared to the same period in 2008.

http://www.canadasisrael.ca/2009/07/israeli-house-for-sale-in-toronto/

reviewed by Moishe Alexander, CFC canadian funding corp CEO

Welcome to the HomeZilla Real Estate Trends. As in previous months, we list the most searched provinces, top 10 most searched cities and top 10 most searched amenities.

HomeZilla’s Most Searched Provinces

1			Ontario
2			British Columbia
3	(+1)		Nova Scotia
4	(-1)		Alberta
5			Manitoba
6	(+1)		New Brunswick
7	(-1)		Quebec
8	(+2)		Newfoundland
9	(-1)		Saskatchewan
10	(-1)		Prince Edward Island

HomeZilla’s Most Searched Cities

1			Toronto
2	(+1)		Ottawa
3	(+1)		Mississauga
4	(-2)		Vancouver
5	(-)		Quesnel
6	(-)		Oshawa
7	(-2)		Calgary
8			Brampton
9	(-)		Winnipeg
10	(-)		Whitby

HomeZilla’s Most Searched Amenities

1			Schools
2	(-)		elementary schools
3	(-1)		grocery stores
4	(+3)		child care services
5	(-1)		coffee shops
6	(-)		high schools
7	(+2)		banks
8	(-3)		pubs
9	(-6)		parks
10	(-)		jr high schools

We hope you enjoy these March 2009 real estate trends and we look forward to your feedback!

Interesting report added by Moishe Alexander, CFC CEO

OTTAWA – June 15th, 2009 – National resale housing market activity returned to pre-recession levels in May 2009. The rebound in activity is being led by an increase in transactions in some of the most expensive markets in the country, which is skewing the national average price upward.

According to statistics released by The Canadian Real Estate Association (CREA), actual (not seasonally adjusted) home sales via the Multiple Listing Service® (MLS®) of Canadian real estate boards totaled 49,521 units in May 2009. This is less than one per cent below activity in the same month one year ago. Year-over-year declines have been shrinking since the beginning of the year.

The seasonal increase in activity continues to be stronger than normal. As a result, seasonally adjusted home sales rose eight per cent to 37,649 units in May compared to April. This marks the fourth consecutive monthly increase in seasonally adjusted activity. Seasonally adjusted activity in May was 43 per cent above where it stood in January 2009.

Seasonally adjusted sales were up on a monthly basis in about 70 per cent of local markets. Monthly activity gains in Toronto (nine per cent), Calgary (25 per cent), Montreal (10 per cent), Vancouver (eight per cent), and Edmonton (12 per cent) contributed most to the overall increase in monthly activity.

The national MLS® residential average sale price in May 2009 reached the highest monthly level on record. At $319,757, it was up fourth tenths of a percentage point from the previous record set in May 2008. Over the past four months, the national MLS® residential average price has recovered 16.4 per cent from the low in January. The average price for MLS® home sales climbed to new heights nationally, and in Saskatchewan, Ontario, Quebec, New Brunswick, and Nova Scotia. New records were posted in only 15 per cent of local markets in May, none of which are among the most active or expensive. The strong rebound in sales activity, not price, in Canada’s most expensive markets is driving up average prices nationally and in some provinces, just as a sharp decline in activity in these markets pushed average prices lower in late 2008.

The supply of homes coming onto the MLS® market continued to decelerate in May. Seasonally adjusted MLS® residential new listings edged lower by eight tenths of a percentage point to 65,070 units, the lowest level since December 2005. Seasonally adjusted new residential listings in May were 19 per cent below the peak reached one year ago.

With the number of sales rising strongly and new listings trending downward, the balance between supply and demand is firming up in British Columbia, Alberta, Saskatchewan, Ontario, and Quebec. This resulted in national sales activity as a percentage of new listings reaching the highest point since December 2007. Residential dollar volume for MLS® sales climbed 10 per cent from the previous month to reach $11.4 billion in May. This is more than 50 per cent above the low of $7.5 billion reported last January.

“Sales activity is now closer to the pre-recession peak than it is to the recent low point reached last January,” says Regina Broker Dale Ripplinger, President of The Canadian Real Estate Association. “Strengthening consumer confidence, low interest rates, and improved affordability are drawing buyers to the housing market across Canada,” he added.

“Fueled by a string of monthly increases in activity, the number of transactions in May reached the highest point since July 2008,” said CREA Chief Economist Gregory Klump. “Inventory levels are still high in many markets, but fewer new listings and rising sales activity suggests that the selection of homes available for sale may shrink as the year progresses. The supply of homes up for sale needs to be drawn down further before average price increases become more widespread among local markets.”

PLEASE NOTE: The information contained in this news release combines both major market and national MLS® sales information from the previous month. The Canadian Real Estate Association has previously released these separately.

CREA cautions that average price information can be useful in establishing trends over time, but does not indicate actual prices in centres comprised of widely divergent neighborhoods or account for price differential between geographic areas. Statistical information contained in this report includes all housing types.

MLS® is a co-operative marketing system used only by Canada’s real estate Boards to ensure maximum exposure of properties listed for sale.

The Canadian Real Estate Association (CREA) is one of Canada’s largest single-industry trade associations, representing more than 96,000 REALTORS® working through more than 100 real estate Boards and Associations. Further information can be found at www.crea.ca

“Good news for the market in ON”, – Moishe Alexander, CFC CEO

presented by Moishe Alexander, CFC CEO

For the second month in a row, the Canadian housing market has recorded an increasing number of sales in most areas around the country.

“Conditions in the resale housing market have improved markedly this Spring,” according to TREB President Maureen O’Neill. “Home purchases have increased as households have taken advantage of low interest rates and slightly lower home prices.”

While April sales remained lower than last year, the housing market gained momentum on a month-over-month basis.

Paul Penner, President of the Fraser Valley real estate board, says current conditions have created one of the best buying opportunities in years. “REALTORS® have successfully communicated to their sellers to be more realistic with their prices, which is why we’ve seen a 29% increase in sales from March to April.”

Penner also attributes the increase to all-time historically low interest rates and still relatively high inventory for Fraser Valley, although it is dropping rapidly.

Below is a brief summary of sales activities in some areas across the country:

British Columbia
Surrey, May 4, 2009: The Fraser Valley real estate market continued to show signs of rebalancing in April with the number of sales increasing for the third month in a row while the volume of available properties stayed constant. Benchmark prices for detached homes and condominiums also showed increases over the last three months.

In April, there were 1,293 sales processed on the Fraser Valley Real Estate Board’s Multiple Listing Service® (MLS®), reflecting a 28% decrease compared to the 1,787 sales in April of last year, however, a 29% increase over March sales. At the same time, the Board received 44% fewer new listings compared to one year ago, 2,477 in contrast to 4,458 in April 2008, helping to stabilize the number of active listings in the Fraser Valley at 9,855.

The Housing Price Index (HPI) benchmark price of Fraser Valley townhouses decreased 11.6% from $333,982 in April 2008 to $295,078 in April 2009. That decrease, however, slowed to 0.1% during the last three months. The benchmark price of apartments also decreased year-over-year by 11.4% going from $260,037 in April of last year to $230,337 in April 2009. Similar to detached homes, the benchmark price for apartments has increased by 4.4% over the last three months.

Ontario

Toronto, May 6, 2009: Greater Toronto REALTORS® reported 8,107 sales in April, down 7% from April 2008. While April sales remained lower than last year, the housing market gained momentum on a month-over-month basis. The seasonally adjusted annual rate of sales in April, at 80,900, was up 26% from March and up two-thirds compared to January’s ten-year low.

The average price for April transactions was $385,641, down 3% from last year.

Ottawa, May 5, 2009: Members of the Ottawa Real Estate Board sold 1,594 residential properties in April through the Board’s Multiple Listing Service® system compared with 1,560 in April 2008, an increase of 2.2%. There were 1,162 sales in March 2009.

The average price of residential properties, including condominiums, sold in April in the Ottawa area was $298,150, an increase of 1% over April 2008. The average price for a condominium-class property was $216,502, an increase of 2.8% over April 2008. The average price of a residential-class property was $318,900, an increase of 0.7% over April 2008.

Alberta

Calgary, May 1, 2009: Sales activity of single family Calgary metro homes was 1,290 in the month of April 2009, showing an increase of 19% from 1,086 sales in March 2009. This was a decrease of 5% from April 2008, when single family home sales were 1,363. The number of condominium sales for the month of April 2009 was 579, an increase of 30% from the 446 condominium transactions recorded in March 2009, and a decrease of 0.3% from April 2008, when 581 condominiums changed hands.

The average price of a single family Calgary metro home in April 2009 was $426,311, showing an increase of 1% from March 2009, when the average price was $420,354, and showing a decrease of 10% from April 2008, when the average price was $474,564. The average price of a Calgary metro condominium was $277,953, showing a 2% decrease from March 2009, when the average price was $284,056, and a decrease of 11% over last year, when the average price was $312,586. Average price information can be useful in establishing trends over time, but does not indicate actual prices in centres comprised of widely divergent neighbourhoods, or account for price differentials between geographical areas.

Saskatchewan

Saskatoon, May 1, 2009: April’s real estate market continued to correct with fewer listings being taken easing higher than normal inventory levels. Saskatoon REALTORS® assisted 353 buyers to find their dream home, a decrease of15% from April 2008 when 413 units were sold.

REALTORS® placed 694 properties on the market in April, a decrease of 23% from 2008 when 896 homes were listed for sale. Buyers had 1499 properties to select from, down substantially from a market high of 1,748 homes for sale in September 2008.

The average selling price for April was $275,455, down from April 2008 when the average price was $306,031.

Nova Scotia

Nova Scotia, April 17, 2009: Though Nova Scotia’s March real estate sales activity was down 15% from last March, it was still the highest level of housing sales activity in the province in five months, as reported by the Nova Scotia Association of REALTORS®. In January 2009, the year-over-year decline was 32%.

The value of all residential transactions recorded through the MLS® system in Nova Scotia totalled $130.5 million in March 2009, a 16% decrease from year-ago levels. The total value of all MLS® sales activity in Nova Scotia was $137.4 million, a year-over-year decline of 17% from March 2008.

The average price for MLS® home sales in Nova Scotia was down slightly in March 2009 compared to levels one year earlier. Edging down 1% from March 2008, the provincial average price for home sales was $188,651.

The MLS® average price rose by 1.6% in Halifax-Dartmouth, to $229,548. The small decrease in provincial average price was the result of fewer sales in this region, where homes are priced higher than in other markets across the province. Sales activity was down by 19% year-over-year in Halifax-Dartmouth, compared to the 15% provincial decline. This resulted in fewer transactions at the higher end of the price spectrum being included in the calculation of the provincial average price.

http://www.whistler-realestate.com/Blog/Canadian-Real-Estate-Market-Watch-for-May

]]> http://moishe-alexander-cmhc.com/2009/06/canadian-real-estate-market-watch-for-may/feed/ 0 http://moishe-alexander-cmhc.com/2009/06/canadian-real-estate-falls-as-mortgage-rates-rise/ http://moishe-alexander-cmhc.com/2009/06/canadian-real-estate-falls-as-mortgage-rates-rise/#comments Tue, 16 Jun 2009 18:26:16 +0000 admin http://moishe-alexander-cmhc.com/?p=131 The U.S. isn’t the only country facing increasing mortgage rates. Several Canadian banks have increased their posted mortgage rates by .2% as housing value decreases are accelerating. For more on this, see the following article from Property Wire.

Residential property prices are continuing to fall and now there are fears that increases in mortgage rates could put off a lot of investors, especially first time buyers.

Canadian home prices fell 5.8% in March from the same month a year earlier, a faster pace of decline than in February, according to the latest published figures from the Teranet-National Bank National Composite House Price Index. It also shows that prices were down 8.5% nationally from the peak in August last year.

Western Canadian home prices were hardest-hit, with Vancouver leading with a 9.6% decline in March from a year earlier, while Calgary saw prices fall 8.4%, and Toronto saw a 6.9% slide. Halifax reported the smallest decline at 0.8%.

Montreal and Ottawa bucked the trend in March with property prices rising 2.9% and 1%, respectively. The index also showed home prices fell 4.1% year-over-year in February.

Analysts were confident that first time buyers were the key to recovery in the market but now Canada’s biggest banks are putting up key mortgage rates. Royal Bank of Canada, Bank of Montreal, Toronto-Dominion Bank, the Bank of Nova Scotia and Canadian Imperial Bank of Commerce are all increasing their posted rates on five-year, fixed-rate mortgages by 0.2% to 5.45%.

Paula Roberts, a mortgage broker with Mortgage Intelligence, said she hopes that buyers will not be put off by the new rates. She explained that the rises are coming from ‘abnormally low’ levels and there are still have plenty of opportunity to take advantage of lower borrowing costs because not all lenders will pass on the increases.

But there are fears that rates will go up even further as the government is concerned about inflation.

‘Certainly there is the recognition that interest rates are going to have to go up both because of the need to rein some of this monetary stimulus in once the economy gains traction and the level of debt that is being issued by governments,’ said Toronto-Dominion economist Grant Bishop.

And Canadians are borrowing less according to a report from Statistics Canada. ‘Net new mortgage borrowing contracted during the first three months of 2009, as investment in residential construction and activity in the resale housing market continued to decline,’ it said.

Note from Moishe Alexander, CFC CEO
This article has been reposted from PropertyWire. View the article on PropertyWire’s international real estate news website here.