“There are now two housing markets in Canada,” National Bank Financial economists Marc Pinsonneault and Krishen Ransgasamy wrote in a client note Thursday.
Home prices have risen nearly 10% over the past year in the first market – Toronto, Vancouver and Hamilton. In the second market – essentially everywhere else in Canada, according to a Huffington Post report – prices have stagnated or even fallen.
Prices in Ottawa-Gatineau, for instance, peaked in August of last year, and have fallen 1.5% since then. In Edmonton, prices peaked in September of 2007, according to the NFB. Since then, they’ve taken a 3% tumble.
Meanwhile, prices are up 9.3% year over year in Toronto and Hamilton, and 9.8% in Vancouver. Those gains pushed the index for Canada as a whole up 5.6% over the past year, according to the NFB.
However, “the number of metropolitan areas seeing rising home prices in October was the lowest in six years,” Pinsonneault and Ransgasamy wrote. “The widely anticipated moderation in Canadian real estate seems to have arrived.”
Some worry that the runaway price boom in Toronto and Vancouver is a symptom of a bubble on the edge of bursting, according to the Huffington Post. However, former U.S. Federal Reserve Chairman Ben Bernanke, who was in charge of that country’s monetary policy during its housing meltdown, said Canada is in better shape to handle a correction than the U.S. was then.
Speaking at an event hosted by the Toronto Globe and Mail, Bernanke said he believed Canada “has made some progress” in preparing for a housing slowdown. He pointed out that the government has strengthened rules on government-insured mortgages, something the States didn’t do prior to the crash.
A Canadian housing slowdown, Bernanke said, “won’t be catastrophic unless it also brings down the financial system.”
Although housing prices continue to rise in cities like Vancouver and Toronto, many other Canadian markets have stagnated, according to new housing price data.