The Calgary region continued to experience the biggest hikes in new home prices in March, leading the country, according to Statistics Canada.
The federal agency reported Thursday, through its New Housing Price Index, that prices in the Calgary census metropolitan area rose by 0.8 per cent on a monthly basis and by 7.5 per cent year-over-year.
Nationally, prices were up 0.2 per cent from February and by 1.6 per cent from March 2013.
“The metropolitan region of Calgary was the top contributor to the (national) gain, marking the third consecutive month it has led the way in Canada. The region also experienced the largest monthly price gain, up 0.8 per cent over February. Builders reported that higher material and labour costs, market conditions and the cost of developed land were the primary reasons for the increase,” said Statistics Canada.
“The year-over-year increase in Calgary was the largest since July 2007.”
And a report released Thursday by the University of Calgary’s School of Public Policy suggests the city could see even higher prices in the coming years due to limitations on suburban growth.
The report entitled ‘Calgary and Edmonton on Divergent Development Paths: Municipal Policy is Densifying Calgary’ said traditionally the two cities have focused on suburban expansion to accommodate their growing populations, but those cities are now moving down different development paths.
The report, by authors Zack Taylor, Marcy Burchfield and Anna Kramer, said that beginning in the late 1990s, Calgary shifted its focus to livability and sustainability, a move that saw policies introduced to promote urban intensification and greater transit use.
“If you keep putting more people on the same land that’s available, land prices are going to go up,” said Jack Mintz, director of the School of Public Policy.
“There’s some value to intensification. You don’t want to empty out the core . . . But there’s a balance you need to think about and I think Calgary from all the stories you hear about lack of development and things like that, we could be in for very significant price inflation over the coming year or two.”
Todd Hirsch, chief economist at ATB Financial, said that while Calgary continues to shine with strong new home price growth, Edmonton prices have fallen flat.
Prices in Edmonton are about 0.1 per cent lower than a year ago.
He said prices in Edmonton are nearly 10 per cent lower than they were in 2007.
“The contrast between prices in the major cities is puzzling,” said Hirsch. “Both cities continue to fare well economically. Edmonton actually holds a slight advantage in the labour market: its unemployment rate in March was 4.8 per cent, slightly lower than Calgary’s 5.0 per cent rate.
“Some of the difference could be explained by the ongoing recovery from last year’s floods, which is still having an impact on material prices and building costs.”