CALGARY — Strong in-migration, population growth and a vibrant oil and gas sector have pushed Calgary average house prices to an increase of 126 per cent in the past decade, says a new report released Monday by Re/Max.
The report said renovation spending and new construction have been “considerable” secondary factors propping up values throughout the city between 2000-2010.
The report also said the total value of residential building permits in the city during that period was the third highest in the country at $23.1 billion behind Toronto ($77.3 billion) and Vancouver ($35 billion).
“A few reasons I believe Calgary has seen such growth in the last 10 years is simple due to our strong economy from natural resources which has been a driving force in migration into Calgary for jobs,” says Tanya Eklund, a realtor with Re/Max Real Estate Central. “This has resulted in growing our population to well over one million, low unemployment rates, a strong GDP and the demand for housing.
“We are highly affected by inventory levels in real estate. When inventory is low and the demand is there, prices increase . . . We had a very balanced market in this time period and saw huge economic growth which proved significant gains in the housing sector.”
In Calgary, the average price rose from $176,305 in 2000 to $398,764 by year-end 2010.
The Re/Max Housing Evolution report said the average residential price in Canada rose by 106 per cent in the past decade, led by Regina which saw a hike of 173 per cent.
Regina was followed by Edmonton (165 per cent), Saskatoon (163 per cent), Winnipeg (158 per cent), Kelowna (156 per cent), St. John’s (149 per cent), Greater Vancouver (128 per cent) and Calgary.
The report said investment in Canada’s housing stock is at an all-time high in the 16 Canadian residential real estate markets surveyed.
“Revitalization, renovation and new construction have been largely underestimated in terms of overall impact on rising average price,” said Elton Ash, regional executive vice-president of Re/Max of Western Canada. “Yet, outside of supply and demand, these have been among the foremost variables influencing real estate values.
“Population growth is a central to housing evolution, supporting steady household formation, which in turn will boost revitalization, new construction and investment in Canada’s housing stock for years to come. Ultimately, a rising population bolsters the health of the real estate sector and fuels the trends that lead to continued average price growth on all fronts.”
A Housing Market Outlook by Canada Mortgage and Housing Corp. said many factors that support resale housing demand in Calgary have become or remained favourable this year, including growth in full-time employment, low mortgage rates and improved net migration.
“However, competing factors such as uncertainty in the global economy has kept some prospective buyers on the fence, and will continue to temper any large increases in sales,” said the CMHC.
The average price for a residential property in the Calgary census metropolitan area this year is forecast to be $402,000, up 0.8 per cent from 2010.
As the supply in the resale market moves lower and conditions become more balanced, stronger price growth is expected next year, said the CMHC.
In 2012, the average price is anticipated to rise 2.2 per cent to $411,000.