Canada’s new housing prices increased at their slowest pace in almost six years
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Contractors’ selling prices in May for new homes increased modestly — the slowest rate of increase in nearly six years, Statistics Canada said Friday. This is a continuing trend that started in September 2006, due mainly to the softening market in Alberta and British Columbia.
Nationally, contractors’ selling prices rose 4.1% between May 2007 and May 2008, a slower pace than the year-over-year increase of 5.2% in April. This was the slowest rate of growth since July 2002 when year-over-year prices increased by 4.0%.
On a monthly basis, prices were unchanged between April and May.
Homebuyers in Saskatchewan continued to experience the largest increases. In Regina, the year-over-year price increase was 30.4%, down from the record high of 34.0% in April. Builders reported that higher labour and material costs have pushed prices higher over the past year.
Increases in Saskatoon slowed to a 13-month low of 30.2% in May. This was the third consecutive slowdown for Saskatoon after a record increase of 58.3% in February this year.
In Winnipeg, contractors’ prices were 16.1% higher than in May 2007, a result of higher material costs and a continuing healthy market. On a yearly basis, Winnipeg was the only city west of Ontario where the increase in new house prices picked up speed in May.
Further west, new housing prices in both Edmonton and Calgary declined between April and May. However, on a year-over-year basis, prices in Edmonton were still up 3.3% over May 2007. In Calgary, the 12-month change was only 0.6%, far slower than its record gain of 60.6% in August 2006.
The picture was similar in British Columbia. On a monthly basis, prices in Vancouver and Victoria declined between April and May. But on a year-over-year basis, builders in Vancouver increased prices by 2.7% from May 2007, while prices in Victoria were unchanged.
In the East, year-over-year increases in St. John’s, Newfoundland and Labrador, continued to reach record levels. As a result of higher labour and land costs, prices were 18.8% higher than in May 2007, up from 16.3% in April.
In Montréal, contractors’ prices were 5.7% higher than in May 2007, a three-year high. This was a result of increased material costs and a strong housing market.
Windsor continued to be the only city showing year-over-year price declines. Prices fell 0.2% in Windsor, which has now experienced deflation in its new housing market for 22 of the last 26 months.
Earlier this week, a report by Canada Mortgage and Housing Corp. showed the annual rate of housing starts dropped in June. Still, the level of activity remained at high levels, above the projections for 2008.
Total housing starts in June were 217,800, down from 227,700 units in May.
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No surprise here. As an investment advisor I can tell you I meet with people all the time that assume house prices (out west anyway) will just keep going on up forever. Prices in Western Canada are overpriced for sure and this is just a natural adjustment.
People got greedy, plain and simple. Fortunately the buyers are starting to come to their senses and this will cause prices to settle down….
The BC and Alberta housing bubbles are going to pop like crazy soon. There are too many high price mortages for itty bitty houses…. the jobs may pay pretty decently in Alberta, but 10-20 oil sands workers living in one little house may be sustainable for a little while but eventually they will move on, and it will be impossible to sell those itty bitty houses for the 900,000 – 1,000,000 they paid for them… they will most likely just walk away and let the bank forclose.