Vancouver New Home Prices Almost Double National Average in May 2010

According to Statistics Canada, Vancouver new home prices rose by almost double the national average in May 2010 on a year-over-year basis.

According to the New Housing Price Index released by Statistics Canada yesterday, Vancouver prices increased by 5.8% from May 2009 to May 2010, and a monthly increase of 0.2% from April 2010.

This was well above the overall Canadian annual figure of 2.9% and almost identical to the national 0.3% monthly figure which had identical increases in March and April.

Nationally new house prices rose the most between April and May in Regina (+3.4%), Toronto (+0.7%) and Oshawa (+.07%). Builders in Regina reported that higher material and higher labour costs as well as increased land development resulted in price increases. Strong market conditions were highlighted as the reason in Toronto and Oshawa.

Of the 21 metropolitan areas surveyed three registered 12-month declines in the Statistics Canada new housing price index for May, including Victoria (-3.9%), Charlottetown (-1.6%) and Edmonton (-0.1%).

The New Housing Price Index (NHPI) measures changes over time in the selling prices of new residential houses agreed upon between the contractor and the buyer at the time of the signing of the contract. It is designed to measure the changes in the selling prices of new houses where detailed specifications pertaining to each house remain the same between two consecutive periods. The prices collected from builders and included in the index are market selling prices less value added taxes, such as the Federal Goods and Services Tax (GST) or the Harmonized Sales Tax (HST).

The provincial sales tax on building materials in Ontario and in British Columbia is embedded in the contractor’s selling prices of new houses. With the introduction of the HST in these two provinces, this provincial sales tax will be eliminated and replaced by the HST. As value added taxes are conceptually excluded from the index, this change may cause negative monthly variations in the index for some metropolitan regions in Ontario and British Columbia during the implementation period of the tax.