Prices of newly built homes climbed higher in June as Toronto-area home-buyers fled the city in favour of wine country.
Retirees, as well as remote workers, have boosted demand for new houses, driving prices up one per cent, the Niagara Home Builders’ Association said in Statistics Canada’s monthly survey of home builders.
Toronto’s new home prices were steady in June compared to May, but surrounding areas saw a lift, with prices rising 0.7 per cent in Ontario’s Kitchener–Cambridge–Waterloo region and 0.5 per cent in Guelph, Ont.
“As working from home becomes more prevalent, we may see an increase in the demand for larger living spaces that single-family homes can offer, causing a shift in demand from condominium apartments towards single houses,” the survey said.
“We expect to see continued home-buyer demand in the more affordable (areas) surrounding Toronto and Vancouver, and anticipate that this demand will strengthen if current pandemic-driven circumstances persist.”
The monthly survey of home builders also suggests that contractors’s home designs will reflect the demands of working from home during the COVID-19 pandemic.
“Builders may start catering to buyers’ preferences by offering additional office space in the design of their new homes to accommodate remote working arrangements,” the survey added.
Vancouver prices ticked up in June compared to May, as did prices in Kelowna. But buyers were able to negotiate lower prices on new builds in Regina and Edmonton, based on contractors’ selling prices of new residential houses, excluding custom builds.
Overall, newly built houses are 0.1 per cent more expensive than a month ago.
Their prices are 1.3 per cent more expensive than a year ago — a seven-month upward trend based on contractors’ selling prices of new houses in 27 cities.
Compared to a year ago, prices have jumped 10.4 per cent for newly built homes in Ottawa, and 8.1 per cent in Montreal.
The survey also noted that the residential construction industry is adapting with new technology to track material deliveries, as builders struggle with labour and material shortages. Ongoing COVID-19 physical distancing measures caused some builders to cut capacity, the data suggested.
A separate report from Statistics Canada on Tuesday showed that construction spending rebounded in May thanks to easing restrictions from the COVID-19 shutdown. But construction is not yet back to February’s pre-pandemic levels, particularly residential construction, according to the survey, which looks at building permits and data from Canada Mortgage and Housing Corporation.
While investments in non-residential buildings, such as offices and warehouses, rose 65.6 per cent in May compared to April, residential investment rose 57 per cent during the same period, that survey said.
The $13.4 billion spent on construction in May is still 16.5 per cent below February levels.
This report by The Canadian Press was first published July 21, 2020.
Anita Balakrishnan, The Canadian Press