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Price of new Canadian Homes Climbs further in March

H.S. Borji
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Price of new Canadian Homes Climbs further in March

New house prices in Canada increased further in March, culminating a strong first quarter of price increases in the housing sector.

The New Housing Price Index rose 0.2 percent in March, following an identical increase the prior month, Statistics Canada reported today in Ottawa. The figure was in line with the consensus forecast.

The New Housing Price Index measures price fluctuations of new homes across 21 major metropolitan areas in Canada.

Calgary was once again the top contributor to the monthly gain. House prices in the capital of Canada’s oil and gas region increased 0.8 percent, following a gain of 0.9 percent in February. House prices in Calgary had risen 1.3 percent in January, the largest increase since April 2007. Builders said market conditions and higher labour costs were the main factors behind the increase.

The price of new homes in St. John’s, Newfoundland rose for the first time since August, as builders reported new list prices for the year. Prices rose marginally in the cities of Halifax, Hamilton and Winnipeg, official data showed.

Prices declined in five metropolitan regions. New house prices dropped 0.4 percent in Charlottetown, 0.2 percent in Victoria, 0.1 percent in Saskatoon and 0.1 percent in Ottawa-Gatineau and Vancouver. The data suggest there were no regional trends in price movements at the end of the first quarter, as declines occurred across most regions of the country.

Compared to the previous 12 months, new house prices rose 1.6 percent, following a gain of 1.5 percent the prior month.

The main contributors to the annual increase were Calgary (7.5 percent gain) and the combined metropolitan region of Toronto and Oshawa (1.6 percent gain). Calgary’s year-on-year advance was the biggest since July 2007.

Significant year-on-year increases also occurred in Hamilton (2.6 percent gain), Winnipeg (2.4 percent gain) and St. John’s (2.3 percent gain).

Five areas posted year-on-year declines in March, led by Vancouver (1.1 percent decline), Ottawa-Gatineau (1 percent decline) and Victoria (0.9 percent decline).

A separate release today from Statistics Canada showed housing starts advanced more than expected in April. House prices advanced more than 24 percent to a seasonally adjusted annual rate of 194,809. Economists forecast a gain to 175,000.

The six-month moving average for housing starts was 183,515.

April’s unexpected surge may reflect a catch-up after severe weather weighed on construction activity earlier in the year.

Another report earlier this week showed Canadian building permits fell sharply in March, supporting the view housing starts would gradually decline in the months ahead in line with the Bank of Canada’s expectations for a soft landing. Building permits fell 3 percent in March, following a drop of 11.3 percent the prior month.

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