According to the Teranet-National Bank National Composite House Price Index, house prices in Canada fell by -5.8% in March compared to March 2008 which is a faster pace of decline than in February (-4,1%).

The index, which measures the rate of change of prices for single family homes in six metropolitan areas, also showed prices were down -8.5% nationally from their peak in August last year.

Western Canadian home prices were hardest hit, with Vancouver leading with a -9.6% decline in March from a year earlier, while Calgary had an -8.4% drop, Toronto a -6.9% slide and Halifax the smallest fall at -0.8%. Montreal and Ottawa bucked the trend in March, rising +2.9% and +1%, respectively.

While the economy remains a huge concern, lower prices and interest rates are spurring first time buyers into the market place, according to a report by Royal LePage Real Estate Services. The report showed that 86% of Canadians say lower interest rates make them more likely to buy a home and 81% say lower prices are another motivating factor. But the economy remains a stumbling block, with 76% citing job security and 64% saying a stable economy are important factors in their buying decisions.

However, first time buyers are returning, helped by homebuyer’s tax credit and a home renovation tax credit for 2009. And so far Canadian developers have avoided a disastrous spring, with new home sales down by -26% in April compared with last year, less than was expected.