Jan 2011 26

New Home Prices in November Higher Than Expected

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New Home Prices by Kevin Dooley
New Home Prices
Photo by Kevin Dooley

The Canada Statistics recently released data on the November new home prices in Canada which have been consecutively rising since July 2009 with only a one month exception. In November, the index gained 0.3 per cent, which is 0.2 per cent more than the rise in October. Analysts expected the new home prices to grow equally in October and November, so the higher number was a surprise. The prices are now up to or even higher than pre-recession numbers.

The highest gains were recorded in St. John's (up 4.2 per cent), Ottawa-Gatineau (up 1.6 per cent) and Halifax (up 1.2 per cent). The most biggest decline in prices hit the Ontario cities of Windsor (down 1.8) and St. Catharines-Niagara (own 1.1). All in all, indexes rose in nine cities out of the total 21, remained unchanged in six and moderated in six. The land-only component of the pricing index contributed to the gain more, with an increase of 0.4 per cent, while the housing-only component rose 0.2 per cent.

Mainly higher labour costs and material prices are given blame for this unexpected inflation, but also higher development fees played their role, especially for St. John's.

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