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Explaining the Canadian 'New Housing Price Index'



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By : Andre Ladouceur    99 or more times read
The New Housing Price Index is a statistic released by StatsCan to show the overall increase or decrease in new home values over the course of a set period of time.

In a given market if the NHPI has increased, it means that the buying cost of a new home has increased (assuming we’re comparing the exact same house with the exact same features over 2 different time periods). The New Housing Price Index is driven by consumer demand and growth in the housing market. As the name implies, the statistic applies only to new homes, and thus can only be measured against new homes.

The features of a new home are factored in to the NHPI – if a new home features a swimming pool, it affects the NHPI. As an example, if the NHPI has not changed for the same new home in the month of January and the month of June, but in the month of June that same new home now features a swimming pool, this in fact means that housing costs have slightly decreased. The reasoning behind this is that one can now buy a home with a swimming pool for the same amount as they would only have been able to buy the home for 6 months ago.

So, keep in mind that the actual New Housing Price Index number does not tell the whole story.

Updated NHPI numbers can be found here: www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/manuf12-eng.htm

At the time this article is being published, we see an unchanged (0%) increase or decrease in NHPI in Canada during the month of March, 2011. Compare this to a relatively small change of a 0.4% increase in NHPI over the course of February, 2011. Over this time period, Eastern Canada saw the largest price increases, led by Saint John, Fredericton and Moncton at an average NHPI increase of 0.4%. The increase in labour and building costs in these areas were large contributors to why the NHPI grew. Toronto, Oshawa, Winnipeg and Regina also saw increases in NHPI, averaging out at 0.3% in these metropolitan areas. Again, this increase was primarily due to building and labour costs in the areas of concern.

In contrast, the cities that saw the greatest decreases in New Housing Price Index were Quebec City (-0.7%), Windsor (-0.6%) and Edmonton (-0.2%). In Quebec City and Edmonton, the decrease NHPI were attributed to lower land costs while the decrease in NHPI in Windsor was attributed to slower market conditions.
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