Brand new homes have become more expensive.
A report says prices of newly constructed houses across Canada rose by an average of 9.9 percent in April 2021 compared to the same month last year.
Statistics Canada said that the increase represents the biggest year-over-year growth since February 2007.
In B.C., the price of new homes in April 2021 posted an annual increase of 12.3 percent in the Vancouver metropolitan region; 9.6 percent, Victoria; and 9.3 percent, Kelowna.
Nationally, the largest gains were in Ottawa, 23.7 percent; Kitchener–Cambridge–Waterloo, 21.9percent; Windsor, 17.9 percent; and Montréal, 17.7 percent.
In the short term, the agency expects demand to “remain strong”.
This may be driven by potential home buyers rushing to “seal the deal” before the mortgage restrictions and higher interest rates kick in.
In a report Thursday (May 20), Statistics Canada recalled that the Office of the Superintendent of Financial Institutions announced in April this year that it plans to tighten the mortgage stress test.
Beginning in June 2021, the qualifying rate for uninsured mortgages could increase to 5.25 percent, or the mortgage contract rate plus two percent, whichever is higher.
Statistics Canada also recounted that the Bank of Canada on April 21 revealed that its policy interest rate could be adjusted in the second half of 2022, which is sooner than its previous 2023 timeline.
Meanwhile, the agency noted that year-over-year changes in new house prices have been “rapidly accelerating since December 2020”.
“With more Canadians working remotely, the demand for homes is expected to remain strong in lower-priced markets near large urban centres,” Statistics Canada reported.
In the same report, the federal agency said that new home prices increased 1.9 percent month-over-month April from March at the national level.
“Increasing construction costs continued to push new home prices higher in April,” Statistics Canada explained.
The agency noted that building construction costs for single homes and townhouses rose in the first quarter of 2021 by 6.8 percent, and 6.9 percent, respectively.
The rise was “mostly driven by five consecutive monthly price increases for softwood lumber”, which increased 10.2 percent in April.