The new housing price index climbed 0.2 percent in the month, following a 0.1 percent monthly increase in August, Statistics Canada reported on Tuesday. The housing-only component of the new housing price index was flat on a monthly basis and up 3.8 percent on the year.
New home prices rise more than expected in September
November 9, 2010
New home prices edged up further in September than the projected figure. But it wasn’t due to market fundamentals. The increase was caused by higher land development fees which were passed onto consumers.
According to Reuters Canada:
So prices are higher, but it’s more about passing on the higher costs the developer bears rather than indicating something about the nature of the market.
But that’s not necessarily a bad thing for the overall economy. The Bank of Canada is concerned about inflationary pressure from the housing sector, but it looks like they don’t have to worry!
New home prices increased in 10 out of the 21 cities in the index led by Montreal and Calgary. Also interesting to note is that housing starts fell further (nearly 10%) to their lowest level in more than a year.
Mark Carney, Governor of the Bank of Canada, continues to urge homeowners to ensure they will be able to service their debt when interest rates increase (as they inevitably will).