Brand new homes in Canada have become more expensive.

Moreover, prices are expected to keep rising.

A new Statistics Canada report states that new house prices across the country increased 3.9 percent year-over-year in October 2020.

According to the agency, this was the “largest yearly increase since June 2017”.

“We anticipate that low borrowing rates, coupled with increased demand for single family homes from homebuyers seeking more living space, will continue to apply upward pressure on new home prices in the near term,” Statistics Canada reported.

The agency made the projection in a report released Friday (November 20).

The report documented changes in the New Housing Price Index or NHPI.

The NHPI covers the following dwelling types: single detached, semi-detached, and townhouses or row homes.

On a month-on-month basis, prices for new homes rose 0.8 percent in October compared to September 2020.

The October increase followed the 1.2 percent price acceleration increase in September.

Statistics Canada also mentioned increases in new house prices in October in Canada's “most expensive markets”. For Vancouver, it was 1.3 percent, and Toronto, 0.6 percent.

Moreover, the agency noted that new home prices have risen 3.1 percent nationally since the beginning of the pandemic in March.

In comparison, Statistics Canada report, new home prices increased 0.1 percent from March to October last year.

The agency explained that low interest rates and demand for larger homes have pushed prices up.

It recalled that the Bank of Canada lowered its policy interest rate from 1.75 percent in January to 0.25 percent in late March to “ease the impact of COVID-19 on the overall economy”.

“This decrease led to historically low borrowing rates available to home buyers, which have contributed to the increased demand for homes since the global pandemic began,” Statistics Canada stated.

The agency also noted the central bank’s current projection that achieving a two inflation rate wo;; “most likely not occur until 2023”.

This means that “borrowing costs could remain at historically low levels”.

Regarding the pandemic, Statistics Canada said that COVID-19 has “affected the housing markets in many ways” with buyers wanting larger homes.

“There has also been increased demand for homes in cities surrounding larger urban centres such as Toronto, Vancouver and Montréal,” Statistics Canada stated.