Higher land values and strong demand are blamed for the biggest increase in Canada
Derrick Penner
Sun
Vancouver‘s new housing prices spiked 1.7 per cent in April — the biggest increase in the country, Statistics Canada reported Thursday — driven by higher land values and strong demand.
Statistics Canada released its new housing price index Thursday, which showed the price of new homes in Canada went up 0.6 per cent in April compared with March, the biggest monthly gain since June of 2004.
In year-over-year terms, the Statistics Canada index showed that prices of new homes in Vancouver had increased 4.4 per cent compared with the same month a year ago, which is slightly less than the national average of a 4.9-per-cent increase.
The report attributed stronger market conditions combined with increased materials and labour costs for the rise. It added that rising land values were a factor in six of 21 metropolitan areas surveyed, including Vancouver.
“We concur, [Statistics Canada economists] have it right,” Peter Simpson, president of the Greater Vancouver Home Builders’ Association said.
“We’re struggling with increased costs almost on a daily basis. Land is going up considerably. Steel has gone up, though it has levelled off, lumber has gone down a bit [but] labour is going up.”
Simpson said the continuation of historically low interest rates continues to drive strong demand for new housing, particularly at the entry level.
He added that the new housing market could be bit stronger than it is, but homebuilders are at the capacity of what they are able to build.
Simpson said the labour shortages are “across the board.”
“We could use [trades people] in every one of the disciplines. Right now, I’m hearing that most of the need is for skilled framing carpenters.”
Increasing labour costs were also a factor for the 1.5-per-cent increase in new housing prices in London, Ont., the city with the next highest monthly increase in prices.
A total of 11 of the 21 cities that Statistics Canada surveyed saw housing prices increase from the previous month, but not Victoria, which saw prices drop by 0.1 per cent from March.
HOUSING INFLATION:
Month Year
over month over year
Vancouver +1.7% +4.4%
Victoria -0.1% +5.9%
Calgary +0.7% +4.1%
Toronto/Oshawa +0.5% +4.8%
© The Vancouver Sun 2005
