Table 9.4
Deflation procedures for gross fixed capital formation in residential structures

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Description Deflation method

Gross fixed capital formation in residential structures

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Value of new residential construction

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Value of construction work put in place

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Single-family dwellings

Work put in place for single family dwellings is deflated monthly, by province, using the New Housing Price Index1 (NHPI).

Semi-detached dwellings

Work put in place for semi-detached houses is deflated monthly, by province, using the New Housing Price Index1 (NHPI).

Row houses

Work put in place for row houses is deflated monthly, by province, using the New Housing Price Index1 (NHPI).

Apartments and condominiums

Work put in place for apartments is deflated monthly, by province, using the Apartment Building Construction Price Index2 (ABCPI). This index is compiled by the Prices Division.

Other new construction

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Cottages

New construction of cottages is deflated monthly, by province, using the New Housing Price Index1 (NHPI).

Mobile homes

The mobile home series are deflated with the industry price indexes for machinery and equipment - mobile homes (CANSIM vector no. V1575570), compiled by the Prices Division as part of survey no. 2318, Industrial Product Price Index (IPPI).

Conversions

Conversions are deflated using the renovation price index described under renovations.

Value of additional costs

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Federal tax on goods and services

Federal tax, in real terms, on new dwellings, conversions, cottages and mobile homes is obtained by applying the GST rate to their respective values.

Provincial sales tax

Provincial taxes, in real terms, on new dwellings, conversions, cottages and mobile homes are obtained by applying the different provincial tax rates to their respective values.

Land development costs

Average land development costs per dwelling are calculated for the base year (2000), then multiplied for the base year and subsequent years by the number of housing starts.

Other acquisition costs

Other acquisition costs are deflated using the average weekly earnings for advertising and related services from the Survey of Employment, Payrolls and Hours (SEPH).

Renovations

A price (cost) index is created using wage and cost of materials indexes. The deflator for the labour component is average weekly earnings for the residential construction industry from the Survey of Employment, Payrolls and Hours (SEPH). The cost of construction materials index is compiled by the Prices Division and is partially adjusted for the GST. A weight of 60% is applied to materials whereas the cost of labour accounts for 40%.

Costs of ownership transfer

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Real estate commissions

Deflation is based on the indexed average selling price of existing homes sold, according to listings in the Multiple Listing Service (MLS) of the Canadian Real Estate Association.

Land transfer taxes

The deflator for real estate commissions is used.

Legal costs

These costs are calculated in proportion to real estate commissions (12.3% in 2000), on a provincial and monthly basis. This ratio is drawn from the Survey of Household Spending3 (SHS).

File review costs

These costs are calculated in proportion to real estate commissions (4.6% in 2000).

Government sector

Government new residential construction is deflated monthly, by province using the New Housing Price Index1 (NHPI).

1. The New Housing Price Index (NHPI) is a monthly series that measures changes over time in the contractors' selling prices of new residential houses, where detailed specifications pertaining to each house remain the same between two consecutive periods. The "house only" component of the index is used. The land portion is excluded. The index is compiled by the Prices Division.

2. The Apartment Building Construction Price Index (ABCPI), survey no. 2330, CANSIM table 327-0040, measures changes in the contractors' selling price of a representative apartment building. The index relates to both general and trade contractors' work and excludes the cost of land, design and real estate fees. The index is compiled by the Prices Division.

3. Survey no. 3508.

Source: Guide to the Income and Expenditure Accounts, Statistics Canada, catalogue no.13-017-X