New homes across Canada get more expensive with prices up 7.9 percent

    1 of 1 2 of 1

      Brand new homes in Canada have become more expensive.

      Nationally, prices increased 7.9 percent in June 2022 compared to the same month last year.

      On a monthly basis, prices rose 0.2 percent last month from May 2022.

      A report released last week by Statistics Canada showed increases in three major urban centres in B.C.

      Prices of new homes posted an annual increase of 6.8 percent in Greater Vancouver in June 2022.

      Victoria recorded a 10.9 percent rise; and Kelowna, five percent.

      Across the nation, Calgary led the pack with an increase of 15 percent.

      Toronto had a 5.1 percent annual increase.

      The report released on July 21, 2022 drew from Statistics Canada’s New Housing Price Index, which measures changes in the selling prices of new residences.

      The NHPI covers single-family homes, semi-detached houses, and townhouses, also known as row or garden homes.

      A previous Statistics Canada report released on October 5, 2020 talked about the strength of new housing market during the COVID-19 pandemic.

      “Housing prices generally fall during a crisis, as people often refrain from big ticket purchases during times of uncertainty,” Rohit Verma and Rehma Husain wrote.

      The authors noted as example the financial crisis in 2008 and 2009, when new house prices fell 3.1 percent year-over-year nationally in August 2009.

      It’s a different story with the onset of COVID-19 in 2020.

      “During the first six months of the current pandemic, however, new home prices have risen as Canadians have adjusted to the new reality of working and staying at home,” Verma and Husain reported.

      The authors related that prices for new houses were up 1.3 percent six months into the pandemic between February and August 2020.

      This was in contrast to the 0.2 percent drop observed during the same period in 2019.

      Much attention is currently focused on the ongoing correction in the market for resale homes, which are existing residences that come on the market.

      A July 15, 2022 report by the Canadian Real Estate Assocation noted that the national average sale price for resale homes posted a 1.8 percent year-over-year decline in June this year.

      Meanwhile, the national benchmark price for this type of property fell 1.9 percent month-over-month in June.

      However, the benchmark was still up 14.9 percent in June 2022 compared to the same month last year.

      A July 22, 2022 analysis by CIBC indicates that the ongoing market correction in the resale market will “not solve the housing affordability crisis”.

      Bank economist Benjamin Tal noted that prices will have to fall further to reach pre-COVID-19 levels.

      “And back then, nobody suggested that Toronto or Vancouver were affordable,” Tal wrote.

      In Greater Vancouver, the benchmark price for all residential properties stood at $1,235,900 in June 2022.

      This level represents a two percent decline from May 2022, but a still helfty 12.4 percent increase over June 2021.