Inching to a balanced market

New-home prices keep edging up in Greater Vancouver but the high-flying markets of Calgary and Victoria are starting to see some price easing, Statistics Canada said in its latest new-housing price index released yesterday.

While Vancouver prices edged ahead 0.5 per cent in October, Victoria prices trimmed their sails by 0.5 per cent.

In oil-rich Calgary, where double-digit increases have been the norm, prices slipped by the same amount, the first drop since November 2004.

Nationally, housing prices in October edged up by 0.2 per cent, the smallest monthly increase since July 2005 and below economists expectations of a 0.5 per cent.

Derek Burelton, an economist with the Toronto-Dominion Bank, said all of that is growing evidence that Canada's housing market is finally cooling.

"We have seen some sales slowdown in the resale markets and that appears to be making its way through to new housing."

But it is still too early to say whether house prices have peaked and are ready for a major correction. Burelton said the market is "inching to a balanced market."

StatsCan numbers show new- home prices rose in 11 of the 21 major metropolitan areas it surveys, with Edmonton leading the pack with a 2.2-per-cent increase in prices.

"Higher costs for construction materials, labour rates and an active housing market continued to be factors driving prices," Statscan said.

Greater Vancouver housing starts remain strong.

The latest numbers from Canada Mortgage and Housing Corp. show starts rising by five per cent last month to 1,405 units compared with a year ago.

The market remains dominated by multiple-unit starts and is expected to provide a wider selection of housing for consumers and improve housing affordability.

Peter Simpson, CEO of the Greater Vancouver Home Builder's Association, said: "We will see some softening of prices for some building materials but they will most likely be offset by increased costs of land and development charges imposed by municipalities.

"We expect to match last year's housing-start numbers and see them fall marginally to around 17,000 next year, which is still a very strong market," he said.

"Most pundits see prices increasing but level off around the six- to seven-per-cent mark."

(prepared by Ashley Ford/Vancouver Province)