The price of new properties in Canada fell for the ninth month in a row despite claims from analysts that the real estate market is on its way to recovery.
The latest figures from federal agency Statistics Canada show prices fell 0.2% in June after a 0.1% fall in May with Western Canada the worst affected region. Year over year, new home prices were down 3.3% compared with June 2008, the sharpest pace of decline since the early 1990s.
Some economists had forecast prices rises while others said they expected prices to remain flat. But there is good news on the re-sale market, particularly in Toronto where average prices rose 6%. The Toronto Real Estate Board also reported that the number of re-sale transaction increased 28% in July compared with the same period in 2008.
‘This confirms the dichotomy between the new and existing property markets in Canada. While there is evidence that the existing home market may have stabilised and is beginning to benefit from increased activity, the same cannot be said for the new home market,’ said Millan Mulraine, economic strategist at TD Securities.
In the new property market Vancouver saw the biggest decline, down 0.9%, followed by Edmonton at 0.8% and Victoria at 0.6%.
Despite a rise in the price of some of the most popular model homes in Vancouver, most developers lowered prices in an effort to stimulate sales and sell off their properties, the Statistics Canada report said.
The largest monthly gains were recorded in Saskatoon at 0.5% followed by 0.4% increases in both Winnipeg and St. John’s, N.L. The largest yearly gains were seen in St. John’s at 10.3% and yearly gains were also recorded in Saint John, N.B., Moncton, N.B., Fredericton, Regina and Winnipeg.
One reason why Toronto is seeing an increase in sales and prices is due to a shortage of properties for sale. Inventory has dropped 36% over last year, according to the city’s real estate board. ‘Surging demand for homes and a dwindling supply is pushing prices higher and driving the multiple offers we are seeing in the market,’ a spokesman said.