Latest figures from the government agency, Statistics Canada, have confirmed a monthly rise in new home prices of 0.4% on January’s figures, in their new house price index. February’s figures are the seventh consecutive monthly gain in property prices for new homes.
The rise represents a 0.1% growth year-on-year to January 2010, compared with an annual decline of 0.9% to December 2009. These latest figures confirm the first year-on-year increase since December 2008.
The index also showed monthly growth of 0.5% for housing only and 0.1% growth for land only. Quebec City registered the highest growth in new home prices with yearly growth of 6.2%.
Although growth figures for new home prices are not as strong as the resale market, growth is clearly steady and remains positive. The resale market has seen average prices recover by as much as 20% from a year ago, according to data from the Canadian Real Estate Association in January.
As with many other economies affected by the global downturn, Canada’s housing market was depressed by the recession. However, the country has avoided a complete collapse in its property market, unlike its neighbour in the US. Government measures have ensured that the market has avoided a much worse situation.
Lowest ever mortgage interest rates in Canada have clearly helped the housing market on the road to recovery. The Bank of Canada cut the country’s main interest rate to an all time low of 0.25% in April 2009. However, they have now indicated that such a low level rate will not continue past June 2010. The next rate decision will be taken on 20th April 2010.
Generally the outlook is positive for Canada with the country well on its way to a steady recovery. Canada’s Prime Minister, Stephen Harper, delivered an upbeat outlook when discussing the economy this week.
Sources: Reuters US, Reuters UK, Montreal Gazette, Bloomberg Business Week
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