Thursday, August 10, 2006

New housing price index continues to climb

Buying a new house got pricier in June, particularly for people looking in Alberta.

Statistics Canada said Thursday that the new housing price index climbed 1.4 per cent in June from May, the fourth consecutive month the index rose with an increase of at least 1 per cent.

"The new house price index continued to increase in June, rising 1.4 per cent, which boosted the year-over-year rate of increase to 9.8 per cent, the fastest pace since November 1989," Royal Bank of Canada senior economist Dawn Desjardins and economist Rishi Sindhi said in a note.

"Today's report suggests that, although the Bank of Canada's core inflation rate slipped back to 1.7 per cent in June, there are underlying price pressures coming from the housing market that are likely to keep upside risks to the inflation outlook."

The price at which contractors are selling new homes has jumped 9.8 per cent from a year ago, Statscan said.

New home prices rose in 15 of 21 major urban areas. In most of the cities where buying a home got more expensive, land prices also rose.

Calgary lead the price charge with a 6.9-per-cent gain, followed by a 4.7-per-cent rise in Edmonton.

”Continued strong demand, upward pressure due to rising construction materials, and trade labour costs were cited for the increases,” Statscan said. ”In Calgary and Edmonton, increased lot values (due mainly to land shortage) along with prolonged construction times, were also specified as factors contributing to the increases.”

The price of a new home rose 1.6 per cent in Saskatoon and 1.2 per cent in Regina in June. Hamilton, St. Catharines–Niagara, Halifax, Québec, Montréal, Toronto and Oshawa, Kitchener, Windsor, Winnipeg, Vancouver and Victoria also experienced price gains.

Prices in Charlottetown and Ottawa–Gatineau were unchanged while St. John's, Saint John, Fredericton, Moncton, London, Thunder Bay and Sudbury fell because of competitive pricing.

On a year-to-date basis, prices in Calgary have surged 49.2 per cent, Statscan said. Edmonton was once more the second-largest gainer at 28.1 per cent, followed by Winnipeg at 9.1 per cent, Saskatoon at 8.5 per cent, Regina at 7.9 per cent, Halifax at 6.9 per cent and Québec at 6.5 per cent.

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