The most recent data from Statistics Canada reveals rising house prices in Canada. The New Housing Price index, released recently, indicates a 0.1% month-over-month increase in average prices in May. This marks the first increase since August 2022.  

The report examined newly constructed homes across the country and found that prices were up in six out of the 27 surveyed census metropolitan areas (CMAs) in May 2023, while eight CMAs reported price declines, and the remaining 13 CMAs remained unchanged. However, when compared to May 2022, prices were down by 0.6%. The data provides insights into the evolving housing market in Canada. 

Housing Prices in May: Regional Variations and Impact of Interest Rates 

According to the latest data from Statistics Canada, pricing changes in May revealed regional variations in the Canadian housing market. Among the surveyed census metropolitan areas (CMAs), 19 CMAs recorded a year-over-year decrease in new home prices, an increase from the previous month’s 14. Victoria experienced the largest year-over-year decline at 2.7%, followed by St. Catharines–Niagara and Edmonton with decreases of 2.4% and 2.3% respectively. On the other hand, Québec reported the largest year-over-year increases at 4.1%, while Charlottetown and St. John’s both saw increases of 1.1% in May 2023. The largest month-over-month decreases were observed in Greater Sudbury (down 1.2%) and Sherbrooke, Quebec (down 0.7%), with home builders citing weak local market conditions as the reason for the decline. 

Prairie Provinces: Affordable Housing Options  

A report by Point2homes on June 19 highlighted the availability of affordable housing, especially for renters and first-time homebuyers, in cities such as Regina, Calgary, Edmonton, Saskatoon, and Winnipeg. These cities, located in Canada’s prairie provinces of Alberta, Saskatchewan, and Manitoba, offer more affordability compared to other regions.  

The Statistics Canada New Housing Index also shows a year-over-year price decrease of 0.8% in the prairie region. These findings align with a study by the Canadian Home and Mortgage Corporation (CMHC), which attributes the affordability to a smaller decline in the number of privately owned homes under construction in 2023 compared to other regions. 

Impact of High Interest Rates and Economic Outlook The Bank of Canada (BoC) recently raised interest rates for the second time in 2023, reaching a high of 4.75%. These higher interest rates are a contributing factor to the increasingly prohibitive cost of housing in many Canadian cities. The BoC raised rates to curb spending, which has led to high inflation in the cost of goods and services, thus impacting affordability. The higher interest rates directly affect loans, including mortgages, making it more challenging for Canadians and newcomers to afford significant purchases like homes and cars. Despite the intention of slowing spending, the BoC reports that Canada’s economy continues to grow, necessitating the rate hike. 

Statistics Canada notes that higher interest rates are influencing housing market activity.  

According to the CMHC, unabsorbed inventory (unsold houses) saw a year-over-year increase of 64.1% between May 2022 and May 2023. These indicators highlight the ongoing challenges in the housing market, where supply struggles to meet demand, and affordability remains a concern due to elevated price levels and rising mortgage rates. 

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