Home sales and construction has decreased dramatically since the tightening of the mortgage lending rules in July 2012 which has caused a massive slowdown in the Canadian housing market with trends similar to the recession in 2009. The Teranet-National Bank Composite House Price Index, a report released by Montreal-based National Bank, measures the price changes for repeat sales on single-family homes. The index released a recent report that showed an overall increase of 0.2% in property prices in Canada for the month of April as compared to the month before. The increase was the lowest increase seen since the recession of 2009, and it is the second lowest growth that has been recorded in 15 years. The yearly increase in price of 2% was also lower than since the recession. A large factor for the small increase is the Canadian government's decision to tighten mortgage lending rules in July 2012 which caused many potential homebuyers to rethink their choices, and also a large number of homebuyers were denied mortgages. The decision to tighten mortgage lending rules was made by finance minister, Jim Flaherty, and Bank of Canada governor Mark Carney, in an effort to get Canadians to assume less household debt. Trends have shown that residential real estate activity usually increases in the spring, so economists are keeping a close watch on the trends to see if real estate sales will rise again. While the index demonstrates a low increase in price changes on repeat sales for single-family homes in Canada, there were three Western Canadian cities where prices increased dramatically. Without these cities, the results may have indicated a decrease in property prices on a national level. Winnipeg, Calgary and Edmonton, all with a booming oil industry have all had relatively high increases compared with the rest of the Canadian cities. The high household that residents in these cities enjoy allows them more purchasing power in the housing market. Property prices have also increased dramatically in oil boomtown Fort McMurray, Alberta due to many factors including a rapid influx in population and high demand for land. The land shortage has caused many developers to bid highly for a chance to build housing in Fort McMurray. Big Canadian cities like Toronto, Montreal and Hamilton all had small gains under 1%. Before the changes in mortgage lending rules, Victoria and Vancouver had booming gains, but according to the recent index, they have losses. Prices also dropped in other major cities including Quebec City, Ottawa-Gatineau, and Halifax. Mazen Issa, Canada Macro Strategist at TD Securities, stated, "We view this report as broadly consistent with stabilization in the housing market over the near-term. Sales activity has been better supported recently which in turn should also help carve out a trough in national home prices. Taken in context with the healthy correction in sales and building activity, today's report further underscores the recent constructive developments in household imbalances." Information about the Alberta economy and the Fort McMurray housing market.
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