OTTAWA - New housing prices in Canada jumped by 0.8 per cent in April from March, the biggest gain in almost a year, amid keen buyer interest in the hot markets of Toronto and Vancouver, Statistics Canada said on Thursday.
The monthly increase was the biggest since the 0.8 per cent advance recorded in May 2016. Compared to April 2016, new house prices leapt by 3.9 per cent, the highest year-on-year since the 4.1 per cent seen in May 2008.
The data will undoubtedly fuel worries about a potential housing bubble in Vancouver and Toronto, where prices grew by the most in 28 years. Bank of Canada Governor Stephen Poloz last month said hefty Toronto home prices increases were not sustainable.
“While softer homebuilding activity is a negative for GDP growth, the return to more sustainable levels should be welcomed, as continued building at a 200k+ pace would mean oversupply was just a matter of time,” wrote BMO Capital Markets Strategist Benjamin Reitzes in a note to clients.
Prices in Toronto, which accounts for 25.49 per cent of the Canadian market, surged by 2.1 per cent, the highest month-on-month advance since the 2.8 per cent recorded in March 1989. Builders cited a shortage of developed land as one reason.
Vancouver prices climbed by 1.2 per cent, their second consecutive advance. Vancouver is the largest city in the Pacific province of British Columbia, where the government imposed a 15 percent property transfer tax on foreign real estate buyers last August.
The price index excludes apartments and condominiums, which the government says are a particular cause for concern and which account for one-third of new housing.
-- With files from BNN