The Teranet-National Bank Composite National House Price Index rose by 0.8% month over month in December, the sixth consecutive monthly increase and a larger rise than the 0.7% recorded the previous month, said National Bank of Canada.

As a result, prices have grown by a cumulative 2.9% since the Bank of Canada's first rate cut in June and are now just 0.3% below the record level reached in April 2022, it noted.

This acceleration in prices comes as the effects of the monetary easing cycle continue to be felt in the housing market, stated the bank.

The number of sales on the residential market has picked up and market conditions are still favorable to sellers, encouraging price rises, added National Bank. With the central bank expected to continue its monetary easing in the months ahead, and with the extension of the 30-year amortization period for insured mortgages in December, the housing market could remain buoyant in the months ahead, provided the deterioration in the labor market remains limited.

However, given affordability challenges and much slower population growth, the pace of house price appreciation should be moderate, according to the bank.