Canadian home prices just saw the largest 12-month increase in a decade amid the ongoing housing boom in Toronto.
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An 'investment mania' is propelling Canada's home prices to their biggest gain since 2007
Canadian home prices just saw the largest 12-month increase since 2007.
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The annual rate of national house price inflation climbed to 13.0% year-over-year in January, up from the prior month's reading of 12.3%, according to the Teranet-National Bank Composite House Price Index.
January 2017 marked the 12th consecutive month that national home prices increased. Plus, it was the largest annual increase since January 2007.
The jump was at least partially due to the ongoing housing boom in Toronto, which saw the annual rate of inflation climb to 20.9% year-over-year, up from 19.7%. Additionally, Reuters reports that Hamilton, an area near Toronto, saw home prices spike by 17.6% year-over-year as buyers were "shut out of the expensive Toronto market."
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Another interesting detail from the report was that prices in Vancouver rose by 0.3% month-over-month in January after several months of drops. Prices were up 16.4% year-over-year, which was below the prior reading of 17.0%, and below the September 2016 peak.
As for Toronto, Madani argued in his note that tougher insured-mortgage rules could cool home sales in the city "where house prices have become completely detached from household incomes."
"While these new rules might not greatly affect some prospective move-up homebuyers, others that have already borrowed heavily against their increased home equity will be restricted in what they can afford to purchase next," he explained. "In addition, prospective first-time buyers will face challenges."
The Canadian dollar is little changed at 1.3080 per US dollar as of 10:31 a.m. ET.
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