Friday, June 09, 2006

New Home Prices in Canada Climb Most in 17 Years

New home prices were 8.2 % higher in April than a year earlier. Contractors' selling prices climbed in 14 of the 21 urban areas surveyed.

This was the most significant month-over-month increase at the national level since April 1989.

Calgary led the way with the highest rate among urban areas with a monthly increase of 4.7 %, followed by Edmonton at 3.9 %, Regina at 1.2 %, Montreal at 1.0 %, Vancouver with 0.9, while Toronto posted an increase of 0.4 %.

High demand for new housing, coupled with higher material and labour costs and increased land values, were cited as the main reasons for these increases.

Other significant gains were reported in Hamilton, St. Catharines-Niagara and London, where new home prices rose 0.6 %.

Prices rose in these urban areas because of favourable market conditions, higher material and labour costs, and increased land values.

Monthly increases were also noted in Ottawa-Gatineau, Toronto and Oshawa, Greater Sudbury/Grand Sudbury and Thunder Bay, Winnipeg, Saskatoon and Victoria.

Of the 14 metropolitan areas showing increases, land prices rose in eight.

Four metropolitan areas reported no change while Windsor, Kitchener and St. John's posted the only decreases because of competitive pricing.

Over a 12-month basis, Calgary had the largest jump for the seventh consecutive month with an increase of 34.8 % while Edmonton followed with 18.6 %, Winnipeg with 10.7 %, Regina and Victoria posted increases of 7.7 % and Saskatoon prices rose 6.7 %.

These are the people who are buying into a housing market where average prices are soaring, even while their income is hardly rising enough to offset inflation.

Wage increases are between 2.2 and 2.5 this year while the average house prices in Canada are up about 13 % nationally this year.

Some economists suspect the combined financial impact of mortgages and other debts to cover bills will drive more and more people into bankruptcy.

While the prices of new homes kept climbing, construction has slowed a bit.

The construction of detached homes lagged in May for the fourth consecutive month.


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