Vancouver home prices post Canada's biggest rebound

VANCOUVER — Metro Vancouver’s new-home prices have followed the resale-home market upward to previous peaks during real estate’s rebound, developers and consultants have noted.

Statistics Canada reported on Thursday that by April the region posted the strongest year-over-year gain in new-home prices among the major markets it examines in its monthly new-housing price index.

Metro Vancouver saw prices edge up 0.4 per cent in April from March; they were six per cent higher than the same month a year ago.

"Year-over-year, for new, six per cent [up] sounds about right," Neil Chrystal, president of Polygon Homes Ltd., said in an interview. "Because the market really started moving last spring after a dreadful winter and fall."

Michael Ferreira, a principal at the consulting firm Urban Analytics, said that premiums are now creeping back into new-home prices over resale prices whereas a year ago developers had to discount prices to be more competitive with resale values.

Ferreira expects that situation could change in the coming months as sales in the resale market have cooled a bit and inventories of unsold homes have increased significantly.

"[However] there isn’t really a lot of standing inventory [of new homes] that would force developers to follow the resale pricing trend that quickly or closely," Ferreira said.

Chrystal added that while new-home prices may have reached new peaks, the cost to service mortgages for purchases is still below the cost to pay down mortgages at the previous peak, thanks to the current low mortgage interest rates.

Chrystal said home sales have slowed, but are "slowing from a very high level."

Elsewhere in Canada, only St. John’s, N.L., in the midst of an oil-induced boom, recorded almost as strong a gain, with a 5.9 per cent year-over-year increase. Winnipeg was next with prices up 4.9 per cent from April 2009.

On the West Coast, Victoria’s new-home prices on the Statistics Canada index remained below pre-recession levels with its index value in April 3.8 per cent lower than the same month a year ago, although it is still showing month-to-month gains.

In April, Victoria’s new-home prices were up 0.2 per cent from March, according to Statistics Canada.

depenner@vancouversun.com