New Home prices increase in Regina, Toronto and Oshawa

 The New Housing Price Index (NHPI) rose 0.3% in May following identical increases in March and April.

Between April and May, prices increased the most in Regina (+3.4%), followed by Toronto and Oshawa (+0.7%).

In Regina, builders reported that they increased their prices as a result of higher material and labour costs as well as increased land development.

In Toronto and Oshawa, builders continued to report strong market conditions.

In May, prices decreased in Kitchener (-0.8%), Victoria (-0.4%), Windsor (-0.2%) and London (-0.1%).

Year over year, the NHPI was up 2.9% in May following a 2.5% increase in April. Builders in all five Prairie census metropolitan areas surveyed reported higher construction material costs.

The largest year-over-year increase was recorded in Regina (+7.4%), followed by St. John’s (+6.2%) and Vancouver (+5.8%).

Compared with May 2009, contractors’ selling prices were also higher in Winnipeg (+4.8%) and Saskatoon (+4.5%).

Among the 21 metropolitan areas surveyed, 3 registered 12-month declines in May: Victoria (-3.9%), Charlottetown (-1.6%) and Edmonton (-0.1%).

Note: The New Housing Price Index (NHPI) 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 (HST).

The HST came into effect July 1, 2010, in Ontario and British Columbia. According to the Canada Revenue Agency "[if] the written agreement of purchase and sale is entered into after June 18, 2009 (November 18, 2009, in British Columbia), and both ownership and possession of the house transfer to the purchaser after June 2010, the HST at 13% (12% in British Columbia) would apply to the sale". A certain number of builders in Ontario and in British Columbia did not yet include the HST in the prices of some of their new houses, as this release refers to the reference month of May 2010.

The provincial sales tax on building materials in Ontario and in British Columbia is embedded in the contractor’s selling prices of new houses. With the introduction of the HST in these two provinces, this provincial sales tax will be eliminated and replaced by the HST. As value added taxes are conceptually excluded from the index, this change may cause negative monthly variations in the index for some metropolitan regions in Ontario and British Columbia during the implementation period of the tax.