The price of a new house in Canada rose slightly, prompting more and more people to worry that Canadian homes may be overvalued. According to Statistics Canada, the housing price rose 0.2% in September, greater than the originally forecast increase of 0.1%. Rapidly increasing prices over the past decade, including the 2009 recession had increased speculation recently that Canadian housing could be caught in a bubble.
Montreal and Calgary lead the price increases, as developments in new areas brought slightly higher construction costs, which were passed onto the consumer.
In spite of bubble fears it's important to note that housing prices rose in only 10 of 21 Canadian cities, and housing starts fell 9.2% - the lowest rate in over a year, and the sixth straight month of declines.
In a move not typical for BC prices, Vancouver and Victoria actually contributed to keep the increase down, as both cities - typically known for their white-hot, and according to some skeptics, overvalued property prices - saw a 0.4% decline in housing prices between August and September. In Victoria, home of Realestock, prices have declined slightly both month over month, and year over year - a new home costs 0.6% less now than it did 1 year ago.
Overall though, the average price of a new house in Canada is still 2.7% higher than it was in September 2009, with the strongest year on year gains the cities of Toronto, Montreal, Oshawa and Vancouver.Sources: Cost of New Homes Going Down... A Bit, C-FAX; Canada Sept New Home Prices Rise More Than Expected, Reuters Canada; New Home Prices Rise Slightly, CBC