A report released Tuesday showed that new home prices in Canada rose slightly more than expected in September, though analysts say the gains came from higher land development fees and housing actually lost more ground in the month.
The Statistics Canada new housing price index showed an improvement of 0.2 percent in September, after a 0.1 percent increase in August. Analysts participating in a recent poll conducted by Reuters had forecast a 0.1 percent increase for the month. The housing-only portion of the index, meanwhile, was flat on a monthly basis but has gained 3.8 percent so far in 2010, and the land only component gained 0.5 percent in September and has gained 0.2 percent on the year.
The cities showing the best results were Montreal and Calgary, where higher development fees drove prices up as builders began working in new areas in those cities. The report reinforced the feeling analysts are getting from other data which is that housing will just not be strong enough moving forward to drive a recovery in the overall economy. The news also makes it apparent that the Bank of Canada shouldn't have to be concerned with inflationary pressures in the housing market as long as interest rates are held in check.
Ten of the 21 cities in the index showed a rise in new home prices in September, while three showed a decline in prices and the remaining eight were unchanged. Overall, the index is up 2.7 percent compared to September of 2009. Housing starts fell 9.2 percent in October, meanwhile, to their lowest level in more than twelve months. It was the fifth time in the last six months starts declined, according to data from Canada Mortgage and Housing Corp.
-- Edited by NC on Tuesday 9th of November 2010 02:01:22 PM
