New home prices rising sharply
June 30, 2021
Canadian new home prices jumped 11.3 per cent in May 2021 compared to a year earlier—the largest 12-month increase in 15 years according to the latest data from Statistics Canada.
Meanwhile, the Teranet-National Bank home price index (HPI) rose 2.8 per cent in May to an all-time high. It was the 19th straight monthly increase and the largest ever since the index began in 1999. Its recent streak of increases coincides with historically high numbers of home sales in most regions of Canada, combined with limited supply.
New home prices had risen in all 27 major markets surveyed, Statistics Canada reported, with the largest increase of 27 per cent seen in Kitchener-Cambridge-Waterloo region of southern Ontario. Ottawa, up 24.8 per cent on an annual basis, and Windsor, up 20.6 per cent, were the other top markets for new home prices.
The Teranet-National Bank HPI surge was led by four of its 11 constituent markets: Ottawa-Gatineau (4.9 per cent), Halifax (4.3 per cent) Hamilton (3.7 per cent) and Toronto (3.4 per cent). Price increases were more moderate for Vancouver (Winnipeg Montreal Victoria (Calgary Quebec City (and Edmonton—all at a less than 2.5 per cent increase. May 2021 was the third consecutive month in which all 11 markets of the composite index were up from the month before.
Home price growth overall continues to accelerate in most Canadian cities. June 2021 prices were up 10 per cent or more from a year earlier in an unprecedented 90 per cent of the 32 urban markets surveyed by Teranet—and by 30 per cent or more almost half of those markets.
The 12-month price growth for single-family homes continues to outpace that of the condo segment. The latter continues to lag as buyer preferences shift from small dwellings in city centres to larger homes in the suburbs. This divergence may not last long, as affordability has decreased in the non-condo segment.
According to the Canadian Real Estate Association, the average composite price of resale homes sold through the multiple listing service had increased 38 per cent in May 2021 compared to a year earlier. This equates to an average dollar increase of $200,000, or about double the average annual household income in Canada.