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Metro Vancouver new home prices move slightly up in August 2009

Blog by Adam Knight | October 26th, 2009

New home prices inch up in August in Metro Vancouver


By Derrick Penner, Vancouver Sun


METRO VANCOUVER — Metro Vancouver new-home prices edged up in August, according to Statistics Canada's latest measure of new-construction values, which helped lessen the dip that prices took during the housing downturn.

Statistics Canada, in its latest new housing price index, found that prices ticked up 0.2 per cent from July to August, not as strong a gain as Metro Vancouver experienced from June to July, but representing the second month in a row new prices increased.

Year over year, however, Metro Vancouver new-home prices in August remained 7.8 per cent below those that new homes sold for in August 2008, but that is down from eight per cent in July.

The increasing trend is in keeping with general market conditions, Robyn Adamache, a Canada Mortgage and Housing analyst, said in an interview.

“We’re starting to see a return, as we did over the summer, of housing demand coming back to the market,” Adamache said. “People are feeling more confident about making that purchase.”

Adamache noted that the August edge-up of prices coincided with a decline in unsold inventory within Metro Vancouver’s resale market, “so it would make sense that prices would start to improve as the number of units available gets lower.”

Statistics Canada said western cities were the communities still showing the steepest year-over-year price declines.

Among prairie cities, Edmonton index prices remained down 11.4 per cent compared with August of a year ago, in Saskatoon, the difference was 7.6 per cent and in Calgary prices were down 6.3 per cent.

On the West Coast, Victoria still shows a steeper year-over-year decline on the new-home-price index with its score in August 10 per cent below its value in August 2008.

Statistics Canada’s report suggested that over recent months builders in B.C. and Alberta “have offered lower prices, bonuses and incentives to motivate sales in the face of weaker market conditions.”

However, Jake Friesen, vice-president of Metro-Vancouver builder Qualico Development, said “[discounting prices] was last year's news.”

Friesen said that at the end of 2008 Qualico dropped prices on its single-family homes an average of 12 per cent, but "in 2009, we've been raising prices on a regular basis."

The increases reflect a recovery of the market for new homes, but Friesen said builders are also seeing the prices on a lot of materials creep back up from lows inspired by the collapse of commodity prices last year.

"Those discounts, those savings [on material prices], have all but disappeared," Friesen said.

Among other cities, St. John's, Nfld., saw the biggest month-to-month gain in prices at 1.1 per cent followed by Quebec City at 0.9 per cent and Regina at 0.8 per cent.

"In St. John's, some builders adjusted prices upward to be more in line with the value of land within the city," Statistics Canada said in the report.

St. John's also saw the steepest year-over-year increase with prices up 7.5 per cent in August from the same month in 2008.

On a national basis, overall prices increased 0.1 per cent from July to August following a 0.3-per-cent increase from June to July, Statistics Canada said.

Year over year, new-home prices on the Statistics Canada index in August remained 3.1 per cent below prices recorded in August 2008.


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