Canada December New House Price Index Report (Text)

The following is the text of the new house price index report for December released by Statistics Canada.

The New Housing Price Index (NHPI) rose 0.2% in December, following a 0.1% increase in November.

The combined metropolitan region of Toronto and Oshawa, as well as the region of Calgary, were the top contributors to the advance. Builders indicated that market conditions were the primary reason for higher prices in Toronto and Oshawa, while increased material and labour costs contributed to higher prices in Calgary.

The largest monthly price advances in December occurred in Winnipeg and St. Catharines-Niagara, where prices increased 0.8% in both regions. The increase in Winnipeg, the largest monthly increase in that city since September 2011, was largely because of increased land development costs. In St. Catharines-Niagara, builders reported new higher list prices for new phases of development.

Monthly prices declined 0.9% in Charlottetown, as a result of lower negotiated selling prices. This was the largest monthly price decrease in that city since March 2008.

Prices decreased in Vancouver (-0.3%) and Victoria (-0.1%) for the second consecutive month. Builders in those regions cited market conditions as the reason for the drop in December. Monthly prices for new houses in both cities have decreased or remained unchanged for most of the year.

Prices were unchanged in 8 of the 21 metropolitan regions surveyed in December.

Year in review

In 2012, the annual average increase in new housing prices was 2.4%, following a 2.2% rise in both 2011 and 2010, and a 2.3% decline in 2009. The increase in the NHPI in 2012 was the largest since 2008, when average prices increased 3.4%.

On a year-over-year basis, the NHPI rose 2.3% in the 12 months to December, following a 2.2% increase the previous month.

The main contributor to the advance was the combined metropolitan region of Toronto and Oshawa, where the year-over-year-increase in contractors’ selling prices was 3.9%. However, new housing price increases in this region have begun to slow, following strong year-over-year growth in 2011 and the early part of 2012.

In Winnipeg, where the pace of the annual increases has been accelerating over the last few months, year-over-year prices were up 5.0% in December 2012, compared with a 4.6% increase over the same period in 2011.

Other significant year-over-year increases occurred in St. Catharines-Niagara (+3.3%), Regina (+3.2%) and Calgary (+3.1%). Larger annual price increases in St. Catharines-Niagara and Calgary were observed in the fourth quarter of 2012, compared with earlier in the year.

Among the 21 metropolitan regions surveyed, 4 posted 12-month price declines in December. The largest decrease continues to be in Victoria (-3.0%) where, year over year, prices have been declining since the latter part of 2008.

Note to readers

The New Housing Price Index measures changes over time in the selling prices of new residential houses agreed upon between the contractor and the buyer at the time of the signing of the contract. It is designed to measure the changes in the selling prices of new houses where detailed specifications pertaining to each house remain the same between two consecutive periods. The prices collected from builders and included in the index are market selling prices less value added taxes, such as the Federal Goods and Services Tax (GST) or the Harmonized Sales Tax.

Effective January 1, 2013, the Quebec Sales Tax (QST) will be calculated on the selling price not including GST. However, to ensure the total taxes payable remains the same, the QST rate will be increased to 9.975%.

The provincial government of British Columbia introduced legislation on May 14, 2012, announcing the return to a provincial sales tax on April 1, 2013. From April 1, 2012, until March 31, 2013, there are new housing transitional rebates in place. After the transition is complete, the provincial sales tax on building materials in British Columbia will be embedded in contractors’ selling prices of new houses. These changes will be reflected in the New Housing Price Index as reported by respondents.

The indexes are not subject to revision and are not seasonally adjusted.

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