New home prices rise

New-home prices in Metro Vancouver continued to rise in May, according to Statistics Canada's new-housing price index, but with buyers feeling less urgency to purchase, the pace of the increase slowed.

Statistics Canada reported Thursday that new-home prices in Metro edged up 0.2 per cent from April to May, which was the 10th straight month with an increase, lifting the region's index score to 5.8 per cent higher than in the same month a year ago.

In April, Metro Vancouver's index value advanced 0.4 per cent from March, for a year-over-year increase of six per cent.

Metro Vancouver markets are experiencing a bit of a pause, Geoff Dzikowski, a consultant with Urban Analytics said in an interview, but demand is still solid.

"Not that there are any panic buttons [being pushed] or fears of a crash," Dzikowski said, "but there's no sense of urgency."

Dzikowski added that in April, Metro markets saw a surge of activity related to changes in mortgage-qualification rules, effective April 19, that made it tougher for first-time buyers to obtain certain mortgages. There were fears that mortgage rates would rise.

A lot of buyers, he said, locked in mortgage rates and needed to make purchases that closed within 90 to 120 days.

Since then, Dzikowski said, developers have put some 4,000 housing units on Metro Vancouver markets in presale.

Now, he said, some buyers are likely holding back to see how developers respond to the implementation of the harmonized sales tax.

"There's just no urgency [to buy]," he said.

On an absolute basis, Metro Vancouver's score on the new-home price index continued to head up, but still has some distance to go to reach the peak it achieved in April 2008.

From April 2008 to its trough in June 2009, Metro Vancouver's score on the index declined nine per cent. By May, the region's new-home price index was still 3.3 per cent off its former peak.

On a year-over-year basis, Metro Vancouver showed the third steepest increase among the 21 major markets on Statistics Canada's index, which helped pull the national average up 0.3 per cent from April, 2.9 per cent higher from the same month a year ago.

(prepared by Derrick Penner/Vancouver Sun)