canada biggest jump in new home prices since jan08
News Posted On: 13 November 2009
New data released yesterday (Thursday) by the federal agency Statistics Canada (Statscan) showed new home prices rising in September faster than at any time since the beginning of 2008. The positive reading of 0.5 percent surprised market observers and is yet another in a string of recent indicators reflecting on the country's strong housing market.
As a result the year-on-year decline in prices eased from 3.1 percent in August to 2.7 percent in September.
Vancouver and Ottawa-Gatineau lead the way with 1.4 percent and 1 percent rises respectively while Windsor, Ontario recorded the biggest decline. Statscan said the jump in the new housing price index was largely due to improving market conditions and consumer confidence.
In the same month permits for housing construction jumped 9.4 percent and the federal housing agency CMHC is looking for a 26 percent rise next year in Toronto.
Stewart Hall, markets strategist at HSBC Canada said sales were above pre-crisis peak levels, citing pent-up demand and rock-bottom interest rates as market drivers. Writing to clients he reported "Real estate has been the economic surprise of 2009....Today's new home price data seems to be pointing to an inflection point."
Thomson Reuters noted that the 0.5 percent rise beat the forecast of every single one of 15 analysts polled.
However housing market buoyancy is not yet reflected in other sectors of the economy, with some recent data questioning a wider economic recovery, and throwing into doubt the Bank of Canada's prediction of 2 percent annual growth in the third quarter.
Exports are expected to be weak, and a second Thomson Reuters poll is predicting a merchandise trade deficit of C$1.75 billion in September. We will soon see if the trade figures, due out later today, will follow housing and surprise to the upside. Even weakness in this sector could add to house-buying momentum if it persuades the Canadian Central Bank to delay interest rate rises.
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