Housing starts jumped 17 per cent last year in Metro Vancouver as buyer interest improved and builders responded by launching new projects.

The 17,867 new starts across the region was about 2,600 higher than 2010 and more than twice as many as in 2009, when the construction industry swooned amid the global financial crisis.

“The bounce back has been very dramatic,” Greater Vancouver Home Builders’ Association president and CEO Peter Simpson said.

He expects 2012 to be a “steady as she goes year” with out any huge spikes or drops.

Builders are still being cautious, he said, because they have no control over whether interest rates climb or if there’s more global economic turbulence.

Another area of uncertainty remains the dismantling of the harmonized sales tax (HST), which Simpson said he wishes would happen faster than the province’s target of April 2013.

Buyers of more expensive homes priced above the HST rebate threshold can avoid the seven per cent provincial tax portion if they wait until the HST is repealed and B.C. returns to a provincial sales tax along with the federal GST.

Simpson said that’s also prompting some home owners to delay major renovations.

“It’s still a concern,” he said of the HST, but added it no longer seems to be the first question prospective buyers ask.

“People buying homes realize if they wait the savings in HST could conceivably be offset by higher housing prices and higher interest rates down the road.”

Almost 80 per cent of the new units started last year were in multi-family developments, up from 70 per cent in 2010.

“Multi-family starts fueled growth in new home construction in 2011,” said Robyn Adamache, senior market analyst for the Canada Mortgage and Housing Corp.

In contrast, just 3,686 detached houses were started last year down, 19 per cent from more than 4,500 in 2010.

Surrey’s single detached house starts fell to 1,091 from more than 1,900 but the drop was more than offset by increased multi-family construction.

“Solid market trends and a more positive economic outlook compared to a year ago have provided the impetus for developers to undertake larger projects,” Adamache said.

Richmond and Surrey both saw 1,000 more multi-family units – that includes new townhomes in Surrey and new condos in Surrey – started in 2011 than the previous year.

Richmond saw the biggest growth surge, with starts up 86 per cent, followed by North Vancouver with a gain of 81 per cent and Langley up 41 per cent.

The most starts in the region were recorded in Surrey and Vancouver – both had just over 3,800 starts – followed by Richmond at 2,636, Burnaby at 1,611 and Coquitlam at 1,442.

Further east in the Fraser Valley, Abbotsford saw a four per cent increase in starts to 537.

Source: Jeff Nagel, Surrey North Delta Leader

The 2012 property assessments for British Columbians being mailed this week confirm what we already knew: House prices in Vancouver, West Vancouver, North Vancouver, Burnaby and Richmond are high and still climbing. However, declines in assessed values in the Sea to Sky region, including Whistler, may have caught some by surprise.

Most single-family homes in Vancouver have increased in value by 10-to-25 per cent, according to area assessor Jason Grant, with a typical home on a 33-foot lot on the west side assessed at $1.6 million, up from $1.2 million last year.

On the east side, the example provided by BC Assessment shows an increase to just over $1 million from $816,000 a year ago.

Apartment values are up more modestly, but a two-bedroom apartment on the west side is quoted at $666,000, up 3.7 per cent from last year’s $642,000.

Assessments are established by analyzing recent sales as well as age, size, condition, location and other characteristics of a property. But the assessed value may – in fact, often does – vary from the market value when it’s time to buy or sell.

The main function of the assessment is not to set a benchmark for a market price but rather to calculate property taxes. The assessed value is multiplied by the mill rate set by city council, which in Vancouver in 2010 was $2.14 per $1,000 of assessed value. The property tax on a $1-million home then would have been $2,140 although the total on the tax invoice would be much higher because the city also collects funds for other agencies, including the regional district, school taxes for the B.C. government, TransLink, the Municipal Finance Authority and BC Assessment itself. There is also a shift in the tax burden from business to residents that adds another two per cent or so.

For the city, the important number is the total assessment roll, which increased to $254 billion in the 2012 assessment from $222 billion a year earlier. From this base, the city finance department determines what rate would be required to generate the same level of revenue as the year before and then calculates the rate needed to produce enough additional revenue to finance its operations for the coming year.

The vast majority of taxpayers, close to 99 per cent, do not dispute the assessment on their property. Some may even take delight in the rising value of their homes.

But for all their care, provincial assessors can easily miss improvements that would command a higher listing price, so would-be sellers should get an independent appraisal.

While it is entertaining to cruise the BC Assessment website and compare the value of your home to others, every property is unique and every buyer has his or her own criteria for investing in real estate.

Both buyers and sellers should use caution in their use of the information provided by BC Assessment.

Homeowners planning to neither buy nor sell and who have no objection to the values ascribed to their proper-ties need not concern themselves with BC Assessment’s latest revelations. An assessment notice is not a report card. It’s simply an estimate of what real estate may be worth.

If you have a roof over your head, heat, hot water and enough room to raise your brood, it doesn’t much matter if the provincial assessor says its value is up or down five, 10 or 20 per cent.

It’s your home. Enjoy it.

Source: Vancouver Sun

Toronto “is starting to stand out as the hottest real estate market right now,” following the release of December sales figures, BMO Nesbitt Burns economist Robert Kavcic says.

However, that may be somewhat of a booby prize, as the Canadian market, following a 13-year boom, is cooling overall – and Toronto is expected to follow suit, he added.

The Toronto Real Estate Board said Thursday that Greater Toronto real estate agents reported 4,718 sales in December, up 10.1 per cent from the same period in 2010. The average selling price was $451,436, up 4 per cent year over year.

That capped off the second-best year on record under the board’s current boundaries, dating to 1994. “Low borrowing costs kept buyers confident in their ability to comfortably cover their mortgage payments along with other major housing costs,” board president Richard Silver said in a release. The board said buyers were held back by a shortage of listings, while tight market conditions kept upward pressure on selling prices.

It’s a different story for Vancouver’s real estate market, where the number of residential sales in December tumbled by 12.7 per cent over the same period a year earlier, according to figures released this week by the Real Estate Board of Greater Vancouver. Sales for 2011 were 5.9 per cent above 2010 levels but 9.2 per cent below 2009. The overall residential benchmark price, as measured by the MLSLink Housing Price Index, has also dropped by 1.5 per cent since June.

Earlier this week, TD senior economist Jacques Marcil predicted both B.C. and Ontario could face challenging housing markets over the next two years.

Mr. Kavcic said the ratio of sales to new listings in Toronto and throughout Ontario “is pretty much in line with historical norms,” but noted that the number of starts for new multiple-unit dwellings (largely condos) in Ontario over the past 12 months had outpaced single family homes by a factor of 1.5 to 1, up from a ratio of close to 1 to 1 over the past decade and “pretty well the largest discrepancy we’ve seen in a long time.”

As a result, “to the extent where there is downward pressure on prices, the condo market is more at risk” in Toronto, he said.

Merrill Lynch warned last month that housing prices could correct by as much as 10 per cent in the next two years in Canada because of weakness in the economy, expressing particular concern about Toronto’s condo market. The Bank of Canada also warned the Toronto market looks overbuilt and could see prices drop.

Source: Sean Silcoff, Globe and Mail

Foreign ownership in American real estate sits at about eight per cent – but that percentage is worth $82 billion US, says the National Association of Realtors.

Homes in many parts of the United States are now worth what they were nearly 10 years ago in 2002, says a report from the association – and it’s this decline that is attracting foreigners, mostly Canadian homebuyers, to snap up a seasonal home at dirt-cheap prices.

From a seller standpoint, the market is “pretty bleak,” says Tom Burk, an associate broker with Sotheby’s Realty International who has a long career of selling real estate on both sides of the 49th parallel. “Given all the bad economic news in Europe and the near political paralysis in the U.S., markets there are struggling to show any kind of consumer confidence.”

In cities where investor interest is high “like Phoenix, Palm Springs or Las Vegas, there is optimism – but in most cities, it’s pretty bleak,” says Burk.

A survey by U.S.-based Credit Sesame of where foreigners are buying, what they are purchasing and how much they are paying shows that the largest group comes from Canada, with Asians and Europeans second and third.

Arizona is the fourth most popular destination for these buyers, trailing Florida, Texas and California.

The largest percentage are buying detached single-family homes for use as a primary residence – and they are paying less than $100,000 each.

Recent reports have claimed that Canadians are the top-ranked outof-state buyers of homes in Arizona, which is still under siege by the flagging economy.

The average Arizona home now sells for about half of what it would have five years ago, says the Federal Housing Finance Agency in the U.S.

The price dropped another 4.6 per cent from the first to second quarter of this year – driving the decline to nearly 15 per cent compared to the same period last year.

The housing market likely won’t turn around until the fundamentals improve, said Marshall Vest, an economist at the Eller College of Management at the University of Arizona in an interview with the Arizona Republic.

But that won’t start until the excess of available homes is absorbed, he said.

“We have enough vacant houses in Arizona to accommodate an entire decade worth of population growth – and that’s if the population were growing,” said Vest.

The recession has changed the way people look at real estate, says Burk.

“It has affected people’s ideas about timing, but it has not affected the basic belief that buying a home and raising a family in that home is fundamental to American values, in many cases,” he says.

Burk’s views are shared by Frank Anton, CEO of the national research firm of Hanley Wood in the U.S.

“We thought people would be soured after watching home values fall, but instead we found the typical American still places high value on home ownership,” says Anton. “We found this holds across all demographic groups and across the country, even in hard-hit places like Arizona and Nevada.”

Credit Suisse Group surveys real estate professionals in several cities in the United States on a monthly basis.

The global financial services company uses 50 as the benchmark for each of nine questions. Above 50 indicates a positive trend, while below 50 means a negative one.

For Phoenix, the report says home prices held steady for October (50 points versus 40 in September), listings remained high (76 points), and buyer traffic inched up to 40 points.

Down the road in Tucson, buyer traffic jumped to 43 points from 27, while prices totalled 43 points (an improvement from 27).

“The economy is poor and unemployment is too high. Nobody wants to buy in this type of environment,” says one realtor.

Las Vegas is also being hit hard by the continuing economic chaos.

“Traffic remains steady on interest from deal-seeking buyers,” says the Credit Suisse report.

But prices remained under pressure with an index of 44, down from a previous 48, while listings were high at an index of 59.

“Low prices and interest rates continue to spur inquiries and activity,” says a Vegas realtor in the survey. “Cash buyers are really driving sales.”

In San Diego, buyer traffic remained very weak with an index of 15, while house prices sat at 25.

“The constant negative news is affecting buyers’ confidence and there is a lot of uncertainty about a potential double-dip (a return of inflation),” says a realtor.

Meanwhile, traffic levels in the San Antonio, Texas, market left a lot to be desired – falling to an index of 14 – while the price index sat at 36.

“Many sellers would like to take advantage of the low interest rates, but we need the buyers to feel confident to keep the ball rolling,” says one real estate professional.

In Miami, Fla., things were looking up, with traffic improving to an index of 39 while priced edged up to 48.

“Cash buyers, both domestic and foreign, are controlling the market,” says a realtor in the Miami area.

Meanwhile, Portland, Ore., which sees buyers from B.C., has seen a strong jump in traffic – almost doubling to an index rating of 25, while prices held steady at 19 points.

Traffic is on the increase, says Debbie Tebbs, broker/ owner of Cascade Sotheby’s International Realty.

“They are doing so because they believe we are at the bottom,” she says.

“There has been a price correction of up to 60 per cent in some areas.”

Source: Marty Hope, Calgary Herald

The Canadian housing market is at risk of a price correction and remains the chief domestic vulnerability to the country’s economy in the new year, according to two new reports.

They warn of an overvaluation of Canadian housing by 10% to 15%, aggravated by rising levels of household debt.
Entering a year laden with potential global economic shocks, Canadian authorities need to beware of housing risk as the chief domestic risk, the International Monetary Fund warned.

“Adverse macroeconomic shocks, such as a faltering global environment and declining commodity prices, could result in significant job losses, tighter lending standards, and declines in house prices, triggering a protracted period of weak private consumption as households reduce their debt,” the IMF said in its annual report on the Canadian economy.

Should the European sovereign debt crisis destabilize the global economy, triggering in Canada a 15% decline in house prices, combined with a severe downturn in construction activity “could result in a GDP decline of some 2.5% over a period of two years relative to the baseline,” the report said.

TD Economics also warns of a possible housing correction bringing prices more in line with fundamentals next year and into 2013.

Deciding the fate of the housing market will be the opposing forces of rock-bottom interest rates and economic weakness, TD economist Sonya Gulati said in a report.

“Looking ahead, we anticipate a tug-of-war action to take hold in the Canadian real estate market. At one end of the rope is the magnetism of low interest rates; at the other are subdued prospects for economic, income and employment growth.

“Ultimately, we expect the economic side of the equation to win out over the near-term,” she said.

That would mean a soft first half of the year largely as a result of external economic tensions. Even if those headwinds subside in the latter half of 2012, rising interest rates will restore the pressure on housing prices.

On average, and with great regional variation, Canadian housing prices could fall by 1.9% next year and 3.6% in 2013, Ms. Gulati said. Home sales could suffer comparable declines, while average starts should fall to 170,000 to 180,000 annually over the next two years.

“Collectively, these adjustments will gradually erase the over-valuation in the marketplace,” Ms. Gulati said.

The pace of adjustment could become decidedly less gradual if Europe fails to contain financial contagion. And if households continue to take on debt, the eventual deleveraging effect could be more pronounced.

With income growth lagging borrowing, household debt has risen to a record 150% of disposable income, a burden the Bank of Canada said represents the greatest domestic threat to economic stability.

While low interest rates continue to encourage borrowing growth, the IMF lent its support to the central bank’s accommodative rate policy.

“Should the recovery be accompanied by further sustained increases in mortgage debt as a share of disposable income spurred by low interest rates, a tightening of macroprudential policies by the government may be needed,” it said.

Source: Tim Shufelt, Financial Post

The more financially unprepared you are for retirement, the more likely it is that there’s a reverse mortgage in your future.

Sadly, we seem to be poised for big growth in reverse mortgages.

“Seniors today are living longer, they’re spending more and they’ve saved less,” said Greg Bandler, senior vice-resident of sales and marketing at HomEquity Bank, the country’s sole provider of reverse mortgages (under the name Canadian Home Income Plan). “They also have so much of their net worth tied up in their home, a very illiquid asset. We’re all about helping them unlock that asset and provide some liquidity so they can have some cash flow and do the kind of things they want to do.”

The plight of the senior who didn’t save enough for retirement – get ready to hear more about it as people 65 and older become a bigger and bigger segment of the population. Where can cash-poor seniors find some money? Reverse mortgages are an easy option (I’ll look at some other possibilities in an upcoming column).

Here’s how a reverse mortgage works in three steps:

1. Borrow up to 50 per cent of the appraised value of your home.

2. Spend the money as you see fit.

3. Repay the principal, and interest that has been accumulating, whenever you sell your home.

It’s rare to hear financial advisers unreservedly criticize a product, but this does happen with reverse mortgages. “The reverse mortgage, to me, has always been the lender of last resort,” said Clay Gillespie, an adviser with Rogers Financial Group in Vancouver, who mainly has seniors as clients. “There are very few cases where I believe it makes sense to take out a reverse mortgage.”

The points against reverse mortgages include hefty set-up fees and higher than usual mortgage rates. But the biggest issue is the way interest compounds. You know how you get paid interest on interest when you invest in a term deposit? With a reverse mortgage, many people will end up paying interest on interest. That’s because unpaid interest on your loan gets added to the principal and generates a bigger interest bill moving forward.

If you keep a reverse mortgage going for many years, a worst-case result would be that you’re left with little or nothing after repaying the accumulated interest and principal and covering the costs associated with selling your home.

HomEquity Bank’s Mr. Bandler said reverse mortgage holders have on average retained 50 per cent of the value of their homes when they eventually sold. He also said that a rising real estate market can offset the effects of a reverse mortgage by boosting the value of the remaining equity in your home.

A sales presentation used by HomEquity Bank includes a slide showing that home prices rose at a national average annual rate of 5.91 per cent for the 15 years to Sept. 30. But the chances of prices rising at that rate in the years ahead are slim. More likely, prices will coast or fall in the near term.

Combine falling home prices and a reverse mortgage and you could see your home equity dissolving in a way that doesn’t leave much when you sell in the future. Don’t worry – you will never owe HomEquity Bank more than the fair market value of your home. If you sell for less than you owe, HomEquity Bank eats the difference.

HomEquity doesn’t leave this to chance, though. The younger you are when you apply for a reverse mortgage, the less equity you can take out. If you sign up at the minimum age of 55, Mr. Bandler said you would be capped at 20 to 25 per cent of the equity in your home. “We’re very conservative lenders,” he said. “That conservative approach is baked into our model.”

HomEquity Bank became a full-fledged bank in 2009, enabling it to offer lower interest rates on reverse mortgages. This helps explains why the volume of new reverse mortgages was up 87 per cent last year over 2009. “The CHIP Home Income Plan is being transformed from a niche product to a mainstream solution that will increasingly be included in Canadian seniors’ financial plans,” the parent company’s 2010 annual report says.

In a world where people are living longer, spending more and saving less, the reverse mortgage is probably a necessity. The less you prepare for retirement, the more likely you are to need one.

Some facts and figures on the Canadian Home Income Plan reverse mortgage:

Setting one up

Set-up costs: As much as $2,500 or so to cover appraisal, legal fees and administration/closing costs.

Interest rates: 4.75 per cent for a variable rate; 5.95 per cent for a five-year fixed term.

Options for receiving money: Take the money in a lump sum, gradually or a combination.

Interest payment options: Pay all, part or none of the interest that accrues ever year.

Profile of users

Average age of applicants: 72

Average amount of home equity borrowed: 36%

Average length of time people stay in their homes after taking out a reverse mortgage: 12

Average amount of home equity left after a home is sold and the reverse mortgage paid off: 50%

Source: Rob Carrick, Globe and Mail

The Canadian housing market continues to defy those who have long predicted its collapse.

If anything, the market seemed to pick up steam in October as sales across the country ended up the best they have been since January.

Sales of existing homes rose 1.2% in October from the previous month, building on September’s 2.5% gain, the Canadian Real Estate Association (CREA) said.

The upward push caused CREA to revise its sales predictions slightly for 2011. It now says sales will rise 1.4% from a year ago, instead of 0.9%.

“The continuing strength of home sales activity in the face of ongoing financial volatility speaks volumes about the con-fidence of Canadians in our housing market,” said Gary Morse, president of CREA.

Even going into 2012, CREA doesn’t see much change in the market since interest rates are near record lows. CREA calls for a relatively minor 0.5% reduction in sales in 2012.

The industry has seen annual sales holding steady at about 450,000 for each of the past three years.

Prices have also shown a steady upward trajectory and are now forecast to attain an average of $362,700 in 2011, which would be a 7% increase from the year before.

Next year, prices are expected to remain flat – something most people in the real estate industry see as an accomplishment under the present economic environment.

“Home sales actvity over the past couple of months suggests buyers are confident that the Canadian economy will remain relatively unscathed by global economic risks, since every home purchase is a homebuyer’s vote of confi-dence in the future,” Gregory Klump, CREA’s chief economist, said Tuesday.

He said there is a strong feeling fiscal policy will be coordinated to give housing any support it should need in the event of an economic pullback.

So far, the industry seems to be getting the support it needs from low interest rates, which have kept buyers in the market. Variable rate mortgages tied to prime are still available as low as 2.7%, while a fiveyear fixed-rate closed mortgage is now being discounted to 3.19%.

CREA said a total of 397,561 homes have traded hands this year, a 1.8% rise from the first 10 months of 2010, but in line with the 10-year average.

Toronto continued to carry the national market in October: Sales were up 14.3% from a year ago. The actvity in Canada’s largest city helped boost overall sales activity, which rose 8.5% from a year earlier.

Prices across Canada continued to moderate. The 5.5% year-over-year increase was the smallest since January and the average price of a home sold in October was $362,899.

The consensus among economists is that the housing industry may not have much more to give in price or sales increases but nor is it set for a massive decline.

“The fact that prices are overvalued today does not necessarily mean they will crash tomorrow,” said Benjamin Tal, deputy economist with CIBC World Markets.

He said a “violent market meltdown” would need a catalyst, such as the subprime crisis, or a sharp increase in interest rates, such as those of 1991.

“We do believe the housing market in Canada will stagnate in the coming year or two,” said Mr. Tal.

A report from TD Economics indicates housing is a key component of the Canadian economy. It noted the construction industry accounts for 10% of gross domestic product.

Source: Garry Marr, Financial Post

Residential sales picked up outside Metro Vancouver in October, according to a B.C. Real Estate Association report released yesterday.

“B.C. home sales rose three per cent in October compared to September on a seasonally adjusted basis,” BCREA chief economist Cameron Muir said in a statement.

“While consumer demand in Vancouver edged lower last month on a year-over-year basis, strong increases were recorded in the Fraser Valley, Kamloops, Kootenay, the North and on Vancouver Island.”

Muir said that total active residential listings in B.C. declined by 3,360 units in October from September, although active listings were up 6.9 per cent from October 2010.

“Market conditions remained slightly in favour of home buyers last month.”

Residential unit sales in the province rose 6.5 per cent to 5,865 units in October compared to the same month last year, while the average price was up 2.6 per cent to $535,695 last month compared to October 2010.

Year-to-date, B.C. residential sales dollar volume increased 16.8 per cent to $38 billion, compared to the same period last year, the BCREA said.

Residential unit sales increased 3.5 per cent to 66,922 units over the same period.

According to the report, the average Metro Vancouver price rose 8.5 per cent from October 2010 to October 2011 to $767,000.

Prices in the Okanagan dropped 14.3 per cent to $367,000 in that period, and fell 6.1 per cent in Victoria to $476,000.

Total sales dropped one per cent in Metro Vancouver in October compared to October 2010 to 2,359.

Sales rose two per cent in the Okanagan to 403 and were up 3.1 per cent in Victoria to 461.

Source: Brian Morton, Vancouver Sun

With sales of existing homes in Canada rising in October to the highest level since January, the Canadian Real Estate Association boosted its forecast for resale activity for 2011.

The industry group today released data on October sales activity as well as a revised forecast for the year.

National sales of existing homes increased 1.2% from the previous month, building on a gain of 2.5% in September. Price gains however cooled to 5.5%, the smallest gains since January.

A total of 397,561 resale units have traded hands so far this year, CREA said, up 1.8% from levels in the first 10 months of 2010.

Here’s what you need to know about the booming Canadian housing market:

Ontario leads the way

Third-quarter sales activity in the province was stronger than forecast, while the rest of the country came in broadly in line with expectations, the CREA said.

It was the strength of activity in Ontario that prompted the CREA to boost its annual forecast for 2011 to 1.4%, up from 0.9%.

The industry group now predicts national sales of 453,300 for the year, compared with 446,915 in 2010.

198,000 of 2011′s residential sales are expected to come from Ontario, with Quebec and British Columbia expected to have sales of 77,000 and 76,600, respectively.

Home prices are still up but showing signs of cooling down

CREA kept its national average home price forecast for the year little changed at $362,700. That’s an annual increase of 7.0% compared with $339,049 in 2010.

Prices are expected to remain flat next year, with the CREA forecasting $362,700 again for 2012.

The industry group pointed to moderating prices in Vancouver in the third quarter compared with the first half of the year, with sales of multi-million dollar properties in that city returning to “more normal levels.”

CREA said the national average price in October rose 5.5% from a year earlier to just under $362,899, the smallest increase since January.

The balance of supply and demand is tight but the market remains on solid footing

October’s monthly rise in sales resulted in a slightly tighter balance of supply and demand, but the national housing market remains “firmly rooted in balanced territory,” the CREA said.

The national sales-to-new listings ratio, a measure of market balance, stood at 53.4% in October, up from 52.8% in September.

Low interest rates continue to bolster the market

CREA also revised its forecast for 2012 upward slightly, predicting a smaller easing than previously expected of 0.5% to 451,200 units.

The uptick is largely due to expectations that Canada’s interest rates will stay low until well into 2012, CREA said.

But domestic and global economic headwinds could put pressure on the sector

“A number of factors will keep Canada’s housing market in check as interest rates remain low,” said Gregory Klump, CREA’s chief economist.

He pointed to tightened mortgage regulations, high household debt and slower economic and job growth as possible headwinds.

However, Mr. Klump noted that persistent news of global economic uncertainty has put only minor dents in consumer confidence to date.

“How confidence evolves depends on how global turmoil plays out over the coming months,” he said.

Source: Christine Dobby, Financial Post

Metro Vancouver new home prices remained flat in September, while edging up slightly year-over-year, Statistics Canada said Wednesday.

The federal agency said prices of new homes in Metro Vancouver remained the same compared to August, but rose 0.1 per cent from September 2010 to September 2011.

In Victoria, new home prices were also flat in September compared to August, but dropped 1.6 per cent year-over-year.

Nationally, new home prices edged up 0.2 per cent from August to September and 2.3 per cent from September 2010 to September 2011.

Nationally, the price increase followed a 0.1-per-cent gain in August and was the sixth straight monthly increase in the new housing index.

Economists had expected prices to rise by between 0.1 and 0.2 per cent in September.

The Toronto and Oshawa, Ont. region — accounting for 27 per cent of the index — recorded a gain of 0.3 per cent from August to September. The smaller Winnipeg region had the largest percentage increase at 1.4, and Halifax gained 0.7 per cent.

“In Winnipeg, price increases were primarily the result of higher material and labour costs as well as higher land values,” Statistics Canada said. “Builders in Halifax cited higher material and labour costs as the main reason for their price increases.”

Prices were higher in eight of the 21 metropolitan regions surveyed, while five declined and eight were flat.

Among the regions posting declines, the biggest drop from August to September was in the New Brunswick area encompassing Saint John, Fredericton and Moncton, where the index declined 0.3 per cent. The Edmonton area was also down 0.3 per cent.

“Some builders in Saint John, Fredericton and Moncton cited slower market conditions as the primary reason for their price decreases, while a few builders in Edmonton moved to new development areas with lower priced lots,” the agency said.

On a year-over-year basis, prices were up 2.3 per cent in September, in line with 12-month increases in July and August.

The biggest 12-month gains in September were in Winnipeg, up 5.5 per cent, and the Toronto and Oshawa region, up 5.4 per cent.

On Tuesday, Canada Mortgage and Housing Corp. reported housing starts were down 1.1 per cent to an annualized rate of 207,600 units. That compared to 208,800 the month before, revised up from the previously reported 205,900.

Meanwhile, data last week showed construction intention weakened in September, as the value of building permits declined for the third straight month.

StatsCan said permit values fell 4.9 per cent to $5.6 billion during the month.

Source: Brian Morton, Vancouver Sun