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The housing market was level in March, with the price of existing homes rising by 0.7 percent from the previous month, according to figures released by the Canadian Real Estate Association (CREA) on Friday.
Year-over-year prices climbed by 8.9 percent, but gains in the pricey Greater Vancouver market helped skew prices higher, the group said.
“A record number of multi-million dollar property sales in Richmond and Vancouver West are pushing up average prices for Greater Vancouver, British Columbia and nationally,” Gregory Klump, CREA’s Chief Economist, said in a statement. “If Vancouver is excluded from the equation, the national average price increase is cut by more than half to 4.3 percent.”
The average price of existing homes was $371,286, up from $341,081 from a year earlier.
CREA said new mortgage regulations, brought in to try to cool the market and prevent a property bubble, may have caused some sales in more expensive housing markets to be pulled forward.
Other potential hurdles for the housing market in coming months include a recent rise in mortgage rates, triggered by higher bond yields, and the likelihood the Bank of Canada will resume its rate hike campaign this year.
Douglas Porter, an economist with BMO Capital markets, said in a research note that leaving Vancouver aside—“the city with tiger blood”—Canada’s housing market is headed for a soft landing.
Separately, Statistics Canada said on Friday that investment in nonresidential building construction in the first quarter of 2011 increased by 1.3 percent from the previous quarter, the fifth consecutive advance.
Other data showed foreign direct investment in Canada rose by 2.6 percent to $561.6 billion in 2010 from 2009, largely due to greater interest from the United States.
With files from Reuters