Average Canadian house sold for $481,500 last month, up 1% in past year

The average price of a Canadian home was $481,500 last month, a rise of one per cent in the past year.

July marked the first time this year that average house prices eked out an annual increase, the Canadian Real Estate Association said Wednesday, as the impact of tougher mortgage rules implemented earlier this year is starting to wane.

"This year's new stress test on mortgage applicants continues to weigh on home sales, but its effect may be starting to fade slightly in Toronto and nearby markets," said Barb Sukkau, the realtor group's president. "The degree to which the stress test continues to sideline home buyers varies depending on location, housing type and price range."

After years of annual increases that frequently touched the double digits, Canadian house prices have cooled considerably in recent months, especially after the implementation of thenew mortgage stress test rulesthat holdborrowers to higher income standards, which has resulted inless borrowing or taking some peopleout of the market entirely.

Prices inched higher but July sawthe total number of homes sold during the month declinecompared to last year, by 1.3 per cent. But after a big plunge at the start of the year, the monthly sales figure has now ticked up for three months in a row.

For economist Doug Porter with the Bank of Montreal, the housing market numbers released Wednesday paint a picture of what economists call a "Goldilocks" market.

"The main takeaway is that the housing market has ceased to be a major source of concern for policymakers neither too hot, nor too cold, at least for now," Porter said.

Average prices inched up on an annual basis for the first time since the start of the year.

But CREAsays the averageisn't the mostaccurate way of assessing house prices because it's skewed by activity in big cities like Toronto and Vancouver, and by certain types of housing. Soit calculates another number called the Multiple Listings Service HousingPrice Index (MLS HPI) that is says is a better gauge of the overall marketbecause it strips out all the volatility.

By that metric, house prices in Canada have increased slightly in the past year, by 2.1 per cent up to July.

Markets in B.C. continue to post strong gains: 6.7 per centin Greater Vancouver, 13.8 per cent in the Fraser Valleyand 8.2 per cent inVictoria.

Moving east from B.C., the numbers soften, with annual decreases of 1.7 per cent inCalgary, 1.3 per cent in Edmonton, 4.8 per cent inRegina and 2.1 per cent in Saskatoon.

Prices in the Greater Toronto Area have declined by 0.6 per cent in the past year, but have risen by 7.2 per cent in Ottawaand 5.7 per cent in Montreal.

"Julywas a good month for housing markets, as sales increased for the third straight month alongside another rise in prices," Toronto-Dominion Bank economist Rishi Sondhi said after the numbers were released. "This lends further credence to our view that markets have shaken off the bout of policy-induced weakness in the earlier part of the year."