Despite concerns about overbuilding in Canada’s residential construction market, the latest data indicates that prices builders are able to charge for new houses continue to rise.
Led by strong gains in the regions of Toronto, Oshawa and Calgary, the New Housing Price Index rose by a modest 0.3 per cent in May, according to figures from Statistics Canada.
Compared with the same time last year, new home prices are up 2.4 per cent.
Leading the way are the regions of Toronto and Oshawa, where new house prices (up 0.5 per cent in May) have risen a healthy 5.5 per cent over the past year on the back of strong market conditions.
Apart from that, markets in Winnipeg and Regina (up 0.5 per cent) in May, are also reasonably strong. Prices in these markets are up 4.4 per cent and 4.3 per cent respectively year on year.
The highest movers of the month were the aggregated metropolitan regions of Sudbury and Thunder Bay, where prices jumped 1.6 per cent in May on the back of higher land prices and strong market conditions.
On the flip side, however, with new house prices falling 0.8 per cent in May and down 3.2 per cent compared with the same time last year, residential selling conditions in the subdued economic region of Victoria are sliding.
The latest figures follow further signs of increasing strength in the Canadian residential building market. Building permit data released earlier this month showed that in May, the seasonally adjusted value of permits issued for new residential units rose back about $4 billion, meaning the pace at which new residential building work is coming in has picked up.
Indeed, over the six months to May, seasonally adjusted residential permit values were up 13.25 per cent compared with the previous corresponding period to May 2011.
Still, concerns about overbuilding – which last month prompted Canadian Finance Minister Jim Flaherty to tighten mortgage financing rules for the fourth time in as many years – persist, especially in the Toronto market.
The latest house price figures, which cover only stand-alone dwelling units, may hide concerns in the market for newly built condominiums, which have been singled out by Flaherty as an area of worry but are not included in the Statistics Canada data.