Over the past year, house prices have risen by an impressive 9.8% across Canada with price increases of between 1% and 7% from Ontario to the Atlantic provinces boosted dramatically by a 50% hike in Alberta, the centre of Canada's booming economy.
Canadian property market: demand goes west
Record energy prices have swelled the coffers of the oil-rich province, as 42,000 people were lured there by high-paying jobs last year up from 11,000 the year before. The resulting increase in population has put pressure on local housing stock, particularly in the cities of Edmonton and Calgary, where prices rose last month by 4.7% and 6.9% respectively, against 1.4% for the rest of the country. And while the rising cost of construction materials and labour is affecting prices across the country, a surge in demand and a "shortage of suitable building plots also put pressure on prices" in Alberta's two largest cities, says CBC News.
In marked contrast to modest price increases across the rest of the country, in Alberta and the west "extraordinary demand levels [are] far surpassing available inventory as significantly higher incomes allow newly confident buyers to begin splashing out", says Phil Soper of Royal lePage Real Estate services on Canada Newswire. "The energy boom continues to bode well for the housing market in Alberta," says Scott Roberts in the Globe and Mail.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Canadian property market: will increases continue?
So as Canadians migrate west en masse, should we be equally optimistic for the years ahead? Not necessarily, say some. New home construction is expected to reach a record 49,000 units next year in Alberta, reports the Globe and Mail, dropping to 45,000 units in 2007, according to the Canada Mortgage and Housing Corporation, "as the rising cost of ownership bites into demand". Also, there are many who are worried that Canada's made in the west' housing boom is heating up, "potentially dangerously so", says Douglas Porter, an economist at BMO Nesbitt Burns investment bank in the Vancouver Sun.
Although interest rates remain "very low", there is the danger that "if prices get divorced from reality", together with an economic slowdown, the boom "could end suddenly".
-
Who is the richest person in the world?The top five richest people in the world have a combined net worth of $825 billion. Who takes the crown for the richest person in the world?
-
Top 10 stocks with highest growth over past decade - from Nvidia, Microsoft to Netflix, which companies made you the most money?
We reveal the 10 global companies with the biggest returns since 2013. One firm has posted an astonishing 9,870% return, meaning a £1,000 investment would now be worth almost £82,000.
