New home prices sky-rocket across the country

After months of modest gains, new home prices in Greater Vancouver jumped in May, gaining 8.8 per cent over the same month last year, Statistics Canada reported Thursday.

In April, that gain was just 6.8 per cent over the same month in 2006, and in March the year-over-year increase was the same. In fact, you have to go back to December 2006 to find another year-over-year increase greater than eight per cent.

But while Vancouver's prices were 0.2 per cent higher than the national average, the pace of change here was glacial compared to massive increases in the Prairies, driven largely by higher labour and materials costs.

Contractors raised prices by 38.6 per cent in Saskatoon and 37 per cent in Edmonton, accounting for most of Canada's 8.6-per-cent year-over-year increase in May, StatsCan said.

Annual gains of only 2.4 per cent in Toronto and 3.9 per cent in Montreal had a moderating influence on the national average, Statistics Canada reported.

On Wednesday, the Canadian Real Estate Association reported that both monthly and quarterly records fell in Canada's resale housing market as anticipation of rising interest rates caused many prospective buyers to cut a deal last month.

June's seasonally adjusted total of 31,300 resale homes trading hands -- up 0.3 per cent from May -- was the highest monthly sales level on record and the third consecutive month in which activity reached new heights, CREA said. Sales broke monthly records in Regina, Toronto, Hamilton, Kitchener, Ont., Montreal and Saint John, N.B.

Home sales also broke quarterly records in the second quarter of 2007, up 3.2 per cent over the previous record in the first quarter, CREA said. Activity was strongest in Vancouver, Toronto, Hamilton and Montreal.

Average resale prices also set a new monthly record in June, up 10.4 per cent year-over-year to $335,180, reaching the highest monthly level on record in Victoria, Regina, Saskatoon, Winnipeg, Kitchener, Ottawa, Montreal and Halifax, the report showed.

For the first half of the year, there were 203,560 transactions, up nine per cent from the same period last year, the first time that sales activity surpassed 200,000 units in the first six months of any year, CREA said.

"Canada's resale market broke all previous records in the first half of 2007, and Multiple Listing Service home sales activity remains on pace to set a new annual record this year," said CREA president Ann Bosley. "Canada's resale housing industry is a driving force behind the national economy, with the average MLS home sale generating $32,200 in additional consumer spending above and beyond the purchase price."

At the same time, new listings also reached the highest level of any quarter on record in the second quarter of the year, CREA added.

"The quarterly increase in new listings caused the MLS housing market to become slightly more balanced, but negotiations still strongly favour the seller in Regina, Saskatoon and Winnipeg," the report said.

(prepared by Vancouver Sun)