Dec 29, 2010, Home prices continue to decline in October

Home prices fell in October, the second straight monthly decline, led lower by Toronto and Calgary, according to a national survey released Wednesday.

The Teranet-National Bank Composite House Price Index eased 0.45 per cent during the month to a reading of 137.32. That followed a 1.07 per cent drop in September.

Year-over-year, the index was up 6.02 per cent —the smallest 12-month rise since the beginning of 2010.

“Despite the last two months’ declines, home prices are still five per cent above their pre-recession peak at the national level, a situation that contrasts sharply with the one prevailing in the U.S., where prices are down 29 per cent from their peak dating four years ago,” said Marc Pinsonneault, senior economist at National Bank Financial Group.

“We do not think that home prices are bound to a sharp fall” in Canada, he said.

“With a record home ownership rate in Canada and with heavily indebted households that are likely to take account of eventual higher interest rates, home prices are likely to decline five per cent over the next two years.”

The Teranet-National Bank index tracks homes that have been sold at least twice.

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