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Prices for new homes in Canada continued to go up again in November according to new data released by Statistics Canada, the 20th straight month for increases.
Today, the government agency stated in its New Housing Price Index (NHPI) for November 2021 that new property prices grew 0.8 per cent nationally month-to-month, continuing the pattern of monthly increases that has been tracked since May 2020.
The NHPI, which covers new single homes, semi-detached homes and townhomes, measures changes over time in the selling prices of new residential homes that are decided between the contractor and the buyer when the purchase contract is signed.
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Ontario, British Columbia and Quebec reported increases of 1.1 per cent, 0.6 per cent and 0.9 per cent in November. Of the 27 census metropolitan areas (CMAs) surveyed in the report, 16 recorded a monthly increase in prices, while costs dropped in two regions and remained unchanged in nine.
The largest price increases for new homes was found in London, Kitchener–Cambridge–Waterloo and Toronto, where values jumped 2.8 per cent, 1.9 per cent and 1.4 per cent monthly. In all three of the regions, Stats Canada pointed out that a high level of sales activity — coupled with low resale inventories and higher new home construction costs — was behind the boost in prices. For instance, the price of softwood lumber rose 5.3 per cent in November and 11.9 per cent in October.
“With reduced output at Canadian lumber mills and labour shortages in the American mills, lumber prices are expected to continue to rise in the coming months, adding further pressure on the costs of building new homes,” said the report.
Prices in Montreal and Vancouver went up 1.1 per cent and 0.7 per cent between October to November. Declines were noted in Saskatoon and Edmonton, where prices dipped 0.1 per cent and 0.3 per cent during the same time period.
On a yearly basis, new home prices jumped 11.7 per cent in November 2021, with costs up in all 27 markets that were surveyed. Kitchener–Cambridge–Waterloo, Windsor and Ottawa reported the steepest annual price growth of 29 per cent, 22.8 per cent and 22.4 per cent.
Canada’s new home market has witnessed “rapid price growth,” during COVID-19, Stats Canada said. Paul Beaudry, the Deputy Governor of the Bank of Canada, has noted that low borrowing costs, higher savings and demand for larger homes outside of cities to accommodate lifestyle changes have contributed to increased demand for housing.
“In addition to these factors, the mix of new home buyers has changed with year over year home purchases increasing more for investors than for first-time home buyers and repeat buyers,” said the report.
In a separate report published by Stats Canada today, the total value of building permits increased 6.8 per cent to $11.2 billion in November. Construction intentions in the residential sector increased 12 per cent to $7.8 billion at the national level, the highest since March 2021. Sector growth was mostly driven by British Columbia, where a $256 million permit for Surrey’s Plaza One tower pushed the province 53.9 per cent higher in November.