“Canadian real estate bears are patient,” writes CIBC. “For more than half a decade they have been waiting for the inevitable crash in the Canadian housing market, only to be disappointed by a defying market. The market will eventually be tested by higher interest rates. But as things stand now, those bears will have to continue to wait as interest rates are likely to remain low well into 2015.”
In the meantime, prices continue to rise. Calgary new home prices were up 6.1% year-over-year in December according to the New Housing Price Index released by Statistics Canada today. It was the largest hike of the cities tracked by the index for the month. Prices were up 0.1% between November and December.
Calgary’s annual average prices rose 5.3% in 2013, the largest gain in six years. Builders cited higher material and labour costs as well as a higher land prices as the primary factors contributing to price increases.
ATB adds, “The residual effects of the 2013 flood could also be a factor. Rebuilding efforts in Calgary and southern Alberta after the June disaster have pushed up labour costs and created some shortages of materials. All of this affects costs for builders who may find little choice but to add these to the price tag of new homes.”