Western cities post largest drops, Statscan says

(Source: Globe and Mail)

Prices for new homes fell 0.5 per cent in March from a month earlier, with the biggest dips in Calgary, Edmonton, Vancouver and Victoria, says Statistics Canada.

The decline was the sixth month-over-month drop in a row, and was exactly as analysts had been projecting, and comes on the heels of a 0.7 per cent drop in February.

New housing prices are now 2.4 per cent lower than a year ago, Statscan said. It’s the third month in a row for year-over-year declines, and means housing prices in most cities are now lower than they were last year at this time.

The new housing price index is an important factor when it comes to figuring out how much inflation is at work in the Canadian economy, but contains information of limited use when it comes to Canadian homeowners trying to value their assets within individual markets.

Other indices suggest home prices have dropped considerably in the past year. The Canadian Real Estate Association says the average price of a home in Canada was $288,641, or 9.5 per cent lower in March than a year earlier.

The Toronto-Dominion Bank’s weighted index of national home prices suggests prices were 8.1 per cent lower in March than a year earlier, but that declines are beginning to moderate.

“In the end, the continued drop in new home prices is a reflection of the overall weakness in the Canadian housing market, and the weak domestic economic conditions and soft labour market conditions [that] continue to sap housing demand,” commented Millan Mulraine, economics strategists at TD Securities.

“Nevertheless, the pace of new home price depreciation is slightly less than those recorded by other Canadian home price measures.”

Read Heather Scoffield’s full article “New home prices edge lower” in the Globe and Mail (May 11, 2009).

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