Friday, November 12, 2010

New home prices up across Canada

When Shawn Richardson breaks ground on his development in Thornhill on Wednesday, it will represent a milestone in the area.

At more than a million square feet for phase one, World On Yonge is being billed as the largest mixed use project in the Greater Toronto Area.

The first phase at Yonge St. and Steeles Ave. will have two residential towers, a 20-storey commercial office building and a three storey shopping centre. Another two residential towers are planned for the 10 acre site which will bring the project to 1.5 million square feet.

“The response has been tremendous. We have many situations where people might buy a retail unit, but they also buy a condominium so they can live where they work,” said Richardson, of Liberty Development Corporation.

Since sales started last September, the group has sold more than 85 per cent of the condos, representing 710 units.

But as the market slows, Richardson expects that the remaining units will typically be the hardest to sell.

Toronto new housing prices remained flat in September over August, the first time that prices have not increased this year, according to figures released by Statistics Canada Tuesday.

However, prices are up by 3 per cent year over year in the Toronto area market.

“ We’re not saying that the market is as strong as it once was, but no projects have tanked, and everyone is doing reasonably well. People are still buying,” said Richardson.

Nationally, new housing prices in Canada continue to increase, even as the economy shows signs of slowing.

Prices were up 0.2 per cent in September, following a 0.1 per cent increase in August according to figures released by Statistics Canada Tuesday.

While prices were up 2.7 per cent year over year in September, they were down from the 3.3 per cent year over year figure seen in June, as the trendline moves downward.

Some analysts believe that prices could end up in the negative figures by next year.

“Prices are divorced from sales, because it takes time for the market to settle. It takes a while before people are forced to reconsider their asking prices,” said Garth Turner, a former revenue minister who held a real estate forum dubbed “HouseAggedon” in Toronto on Tuesday.

Turner says he is convinced that the market remains in a bubble.

“You’ve got a severely inflated market where even with some of the best mortgage rates in history you are still seeing a persistent sales decline. People just don’t have the money to spend,” said Turner.

While prices seem to be holding the line in Ontario, builders blamed the newly implemented HST for slowing sales.

“The pace of residential construction activity has eased across Ontario as a result of slowing of sales earlier this year around the implementation of the HST,” said Ontario Home Builders’ Association president Bob Finnigan. “With that shift of demand to the earlier part of the year, construction has declined accordingly.”

Some urban areas did see month over month price declines, which Turner says is a sign of things to come.

Prices declined by 0.1 per cent in Hamilton, and 0.4 per cent in both Victoria and Vancouver.

“In Vancouver and Hamilton, a number of builders reported lower negotiated selling prices in September, while in Victoria, some builders offered discounts to spur sales,” said Statistics Canada.

The largest year over year increase is in Regina at 6.7 per cent, followed by Winnipeg at 5.2 per cent and St. John’s at 4.9 per cent.

The biggest year over year losers are Charlottetown at minus 2.2 per cent, Greater Sudbury and Thunder Bay at 1.2 per cent, Victoria at 0.6 per cent, and Windsor at 0.5 per cent.

Source: Tony Wong (Toronto Star)

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