New home prices in Canada continued to increase month-on-month in May, led by growth in Toronto and Vancouver, according to the latest figures.
Statistics Canada said last week that the average price of a new build home in the country rose 0.7% in May compared with the previous month, with Vancouver showing the biggest price rise in a decade.
The 0.7% increase recorded in May, far exceeded economists’ forecasts for a 0.3% rise. The new housing price index excludes apartments and condominiums.
Home prices in Toronto, Canada's largest city, increased by 1.1% as builders cited a shortage of developed land and higher construction costs, as well as market conditions, but it is worth noting that the rate of capital growth is slowing, as a result of the recently introduced foreign buyers tax and other measures that the Ontario government implemented in late April to rein in the Toronto housing market.
In Vancouver, where the provincial government put its own foreign buyers tax in place last year, home prices we up 2.2%, the steepest hike since May 2007.
The latest home price data came the day after the Bank of Canada raised interest rates for the first time in nearly seven years.
But some experts believe that home prices in Canada will keep rising, despite the interest rate hike.
“Canadian homeowners are prepared for the marginal increase in mortgage rates,” said Phil Soper, Royal LePage’s president and CEO.