Hot Housing Market Remains Superheated

The surge in housing prices for new homes is now nearing the increases of the late 1980s housing boom, and will likely start putting upward pressure on inflation.

New house prices continued to rise strongly in February, as the New Housing Price Index rose 0.7 per cent, down slightly from January's increase of 0.9 per cent.

New house prices prices were up seven per cent on a 12-month basis compared to 6.6 per cent the previous month, the steepest year-over-year increase in 16 years.

New house price gains are moving up toward levels not seen since the real estate boom of the late 1980s.

Good demand for new housing in some metropolitan areas also contributed to higher price levels while land-value increases contributed to price hikes in 10 of the 21 metropolitan areas surveyed.

Fifteen of the 21 metropolitan areas posted monthly gains, led by Calgary at 2.2 per cent.

Construction material and labour cost increases were the main factors pushing price levels up nationally.