In reasonably positive news for the building and construction industry, the latest figures show that prices for newly constructed houses throughout Canada continued to rise in June, albeit at a modest pace.
Following a 0.3 per cent increase in May, the New House Price Index rose by a further 0.2 per cent in June, according to the latest data from Statistics Canada.
Compared to 12 months ago, prices for newly constructed homes are up 2.3 per cent – a modest increase, but a respectable one in light of housing market conditions across much of the developed world.
In terms of regions, Toronto and Oshawa led the way amid tight market conditions and rising land prices, while prices also rose in Calgary amid higher material and labour costs.
A further bright spot was Victoria (up 0.6 per cent), which recorded its first price rise since July last year.
All told, Toronto, Oshawa, Regina and Winnipeg remain the tightest markets.
The latest data, which comes amid more positive data regarding residential permits, indicates that current market conditions throughout Canada’s residential construction industry are reasonably favourable to developers, with new work coming in at a faster pace and a modest ability to charge higher selling prices.
That said, there are fears that tighter lending restrictions following government moves to tighten mortgage lending in July could precipitate a slowdown in the market toward the end of the year.
Indeed, Scotiabank expects house prices throughout the country to decline by 10 per cent over the next two to three years, whilst some economists anticipate a 25 per cent correction.
The largest area of concern relates to a low interest rate fuelled boom in condominium building in Toronto and Vancouver.