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Statistics Canada has released their monthly market update, reporting that the New Housing Price Index (NHPI) rose 0.2% in the month of April, continuing a streak of similar increases over the past year. Of all the Canadian cities, St. John’s experienced the largest property price growth at 1.0%, which is a significant increase compared to many stagnant months after an advance of 4.3% back in November, 2010. Among the other leading cities of this advance, Calgary has been listed as a recurring contributor, rising by 0.5% in April.
Although St. John’s property prices increased, the region’s surrounding cities– Fredricton and Moncton — brought the average property price down by 0.1% for the metropolitan area. Similarly, Montreal endured lowered pricing as a tactic to close sales and move properties. But even with these set-backs, the national average still came out ahead.
Year-over-Year Movement
According to Statistics Canada’s news release, three Ontarian regions had a part to play in the year-over-year movement pushing Canadian property prices upward. Hamilton not only saw a 0.8% property rise moving into April, but has also consistently risen year-over-year at a rate of 2.8%. The combination of Toronto and Oshawa just slightly topped this rate at a year-over-year increase of 2.9%. Other Canadian cities important to this advance include Winnipeg (5.5%), Calgary 94.7%), and Regina (3.1%).
Factors of Climbing Property Prices
While many cities had different reasons for the increase or decrease in property value, one of the most common explanations for the national rise was inflated building material and labour expenses. Prior to 2010, Canada produced more materials than the demand required, however, this is no longer the case. With such strain on the construction sector, it is no surprise property prices are rising as well. Similarly, if the prices continue on this path, the economy may see a steeper decline in sales, which would only drive property prices up further to compensate slowing market activity. If these conditions persist, Canada will see larger gains but less sales moving forward.
