CALGARY – New home prices in the Calgary census metropolitan area rose slightly in January, according to Statistics Canada.
The federal agency reported Wednesday that prices were up 0.3 per cent from December and up by 0.8 per cent from January 2010.
David Hooge, president of the Canadian Home Builders’ Association-Calgary Region, said new home prices have remained stable here.
“We certainly haven’t decreased,” said Hooge. “We’re expecting there to be some minor increases of perhaps 2.5 to three per cent increase over the year. Nothing outrageous for sure. It all depends on what sort of absorption we see and what kind of traction we see going through the spring. But at this point that’s kind of what we’re banking on.”
Richard Cho, senior market analyst for Calgary for Canada Mortgage and Housing Corp., said the house only component for the New Housing Price Index rose by 0.3 per cent on a monthly basis but fell by 0.1 per cent year-over-year in the Calgary region. The land only component was up 0.1 per cent from the previous month and by 2.5 per cent from last year.
“New home prices have started to stabilize towards the end of 2009 and in the beginning of 2010. This trend is expected to continue as the year progresses,” he said.
“On a year-over-year basis, the gains in home prices can be attributed to the land component as the house component has remained relatively flat. With fewer homes under construction from the previous year, down 27 per cent, pressure on labour and material costs has been modest.”
Nationally, Statistics Canada said the NHPI rose 0.2 per cent in January following a 0.1 per cent advance in December. Prices were up 1.9 per cent from a year ago.
The house only component was up 0.3 per cent from the previous month and by 2.2 per cent from a year ago. The land only component rose by 0.1 per cent on a monthly basis and by 0.8 per cent on a year-over-year basis.
Between December and January, prices increased the most in Winnipeg (0.7 per cent), followed by Québec City (0.5 per cent), Toronto and Oshawa, and Montréal (0.4 per cent).
Price decreases were recorded in the Saint John, Fredericton and Moncton metropolitan regions aggregation, as well as in Hamilton (0.2 per cent) and Edmonton (0.1 per cent).
For the third month in a row, the largest year-over-year increase was recorded in St. John’s (6.2 per cent). Compared with January 2010, contractors’ selling prices were also higher in Regina (6.0 per cent) and Winnipeg (5.9 per cent), added the federal agency.
Among the 21 metropolitan regions surveyed, five registered 12-month declines in January: Windsor (3.7 per cent), Charlottetown (1.9 per cent), Greater Sudbury and Thunder Bay (1.1 per cent), Victoria (1.0 per cent) and St. Catharines-Niagara (0.8 per cent).
Meanwhile a report released Wednesday by the Conference Board of Canada said Canadian builders can expect a third consecutive year of lower profits in 2011 as spending on new homes declines.
The Canadian Industrial Outlook: Canada’s Residential Construction Industry – Winter 2011 said new mortgage lending rules, elevated levels of consumer debt, and anticipated mortgage rate increases are some of the factors restricting new home sales this year.
But the Conference Board said demand will begin to pick up next year as the effects of lending policy changes fade. Housing starts are not expected to return to pre-recession levels of more than 220,000 units per year.
The report said housing starts are expected to average 175,000 units this year, down from 190,000 in 2010. With starts not expected to return their pre-recession levels, renovations and repairs will account for a growing share of industry revenues. Growth in renovations and repairs spending is expected to outpace new home expenditures over the next four years.
Containing costs will continue to be an issue for the industry. Prices for building materials are on the rise and skilled trades shortages are expected to lead to above-average wage growth. Industry costs will dip by 2.3 per cent this year because of slower pace of building, but they will rise steadily beyond 2011.
Pre-tax profits are expected to fall by 5.3 per cent to $1.8 billion in 2011, their lowest annual level since 2004. Industry profitability will steadily improve beginning in 2012, but costs and competitive pressures are expected to keep margins tight over the next four years.
© Copyright (c) The Calgary Herald