Canada's house price index rose sharply in February

According to the report from Statistics Canada, new house prices were up in 22 of the 27 census metropolitan areas (CMAs) surveyed, pushing the national index up 1.9% in February. Builders in most cities linked the spike to higher construction costs as well as to an active housing market. 

New home prices continued to rise as record low interest rates remained a key driver for housing activity. Furthermore, buyers, including first-time buyers and those looking to upgrade their living arrangements, also added pressure to housing prices in an already low-supply market. Younger Canadians are an important cohort with respect to housing demand, as roughly 12% of Canadians aged 25 to 35 purchased a property during the pandemic.

Nationally, new house prices rose 7.0% year over year in February—the largest increase in over a decade (since July 2007). Kitchener–Cambridge–Waterloo (+16.0%) registered the largest year-over-year gain in February, displacing Ottawa (+15.0%), which had been growing at the fastest year-over-year pace nationally since May 2018. Working from home, as well as Kitchener–Cambridge–Waterloo's relative affordability compared with Toronto, has strengthened the demand for larger homes in this housing market. 

Other notable year-over-year price changes were seen in Hamilton and Guelph (both up +11.0%). Both cities offer more affordable housing options than Toronto, while still being in close proximity to Canada's largest economic centre. The new housing market remained weak in Regina (-0.6%) in February.