Thursday, September 11, 2008

New Home Prices Falling

From CBC News:

The nippy growth of the national housing market is continuing to slow, data released by Statistics Canada on Thursday suggests.

Inflation-adjusted prices for new homes nationwide were up 2.7 per cent in July from the same month the year before, the federal agency reported — a slight deceleration from the 3.5 per cent year-over-year hike in new housing prices recorded in June.

Statistics Canada said it was the sixth consecutive month of easing in price pressures for new homes, "mainly due to the softening market in Western Canada." Housing prices have been on an overall cooling trend for two years, the agency said.

Still, several Prairie cities posted torrid growth in costs for new homes. Regina booked year-over-year price increases of 29.6 per cent, down from a peak of 34 per cent in April but still the national leader. Saskatoon had the third-hottest market, with new-home prices rising 13.1 per cent from July 2007.

St. John's had the second-hottest market for new houses, recording a 24.3 per cent rise in prices.

It was a much different story for builders in Edmonton, where prices for new housing fell 5.3 per cent in July from the year earlier.

Statistics Canada attributed the upward pressure on prices for new homes to higher costs for fuel, steel and labour.

New home prices will likely be negative, on a nationwide year over year basis, by the end of the year.

4 comments:

patriotz said...

Statistics Canada attributed the upward pressure on prices for new homes to higher costs for fuel, steel and labour.

It appears that nobody at Statscan understands that house prices, like all other asset prices, are determined solely by what the buyer is willing to pay.

Are we supposed to think that fuel, steel and labour got cheaper in Edmonton and more expensive elsewhere?

roger said...

This article is being carried on the Canwest news wire: Real estate wall closing in

OTTAWA -- Canadian housing prices need to fall nearly 10% further to bring them back into line with incomes, a major investment firm warned Thursday. And that assumes continued moderate growth in incomes, according to the report by BMO Capital Markets, suggesting that should income growth falter, housing prices would have to fall even further to bring them back into balance.

"After six years of unsustainable growth, prices have run smack into the affordability wall," said BMO Capital Markets, reinforcing a similar warning issued in a study by the University of British Columbia earlier this week, which said prices in some major cities prices would have to plunge 25% to bring them back into balance.

"Homeowners who purchased six years ago would still have hefty capital gains, but those who bought during the past two years would face temporary losses," Guatieri noted.

Panamericana said...

UK:Gazundering...

http://www.dailymail.co.uk/news/article-1055417/Gazundered-The-unscrupulous-practice-strikes-fear-selling-home-back.html

patriotz said...

those who bought during the past two years would face temporary losses

Correct, inasmuch as one's lifetime is temporary as well.