House Prices keep Rising - Globe & Mail 01/10/06

House prices keep rising

By TAVIA GRANT
Tuesday, January 10, 2006

These are golden days if you happen to be selling your house — especially in Calgary.

New housing prices continued the biggest string of increases since at least 1981, edging 0.5 per cent higher in November from October, Statistics Canada said Tuesday. Prices in Calgary posted the nation's biggest monthly gain for the third time in a row. Nationally, prices were 5.5 per cent higher than a year earlier.

The agency attributed November's gains to a steady market for new housing, along with higher building material and labour costs. Yet, unlike in U.S. housing markets, while Canadian real-estate prices have continued to streak upwards, economists don't foresee a sudden, steep slowdown here.

“Although the Canadian housing market merits close watching in light of recent strength, it does not warrant nearly the same degree of concern as is directed at the white hot U.S. market,” said Eric Lascelles, strategist at TD Securities Inc.

Prices have climbed every single month since September, 1998, according to Statscan's Randy Sterns.

But signs of cooling are already appearing, with housing permits falling more than expected in November and housing starts likely to ease next year, separate reports showed today.

“This suggests that the Canadian housing market may be beginning to ease in an orderly fashion,” Mr. Lascelles said. “This should be viewed as good news, because it has never been in doubt that the volume of housing activity in recent years was unsustainably strong.”

Among cities, St. Catharines-Niagara, Kitchener, Edmonton and Québec City also led price gains, while Ottawa and Hamilton registered modest monthly declines.

Price increases in Calgary were mainly due to higher material and labour costs, specifically for drywall, flooring, lumber and excavation. Higher lot values were also a factor, Statscan said.

Since 1997, prices in Calgary have risen 59 per cent, the most in Canada, followed by increases in Ottawa, Regina, Montreal and Edmonton. They've risen the least in the Sudbury and Thunder Bay area.