CMHC released its quarterly housing market report yesterday. Western Canada in general and Alberta specifically is forecast to lead the country in a number of categories.
According to the report, Alberta will continue to experience economic expansion with real GDP growth of 3.4% in 2012 and 3.2% in 2013. Major sectors of the economy are projected to grow this year with some moderation in growth in 2013.
Rising consumer spending is reflected in double-digit growth of retail sales. Investment remains elevated, driven largely by capital investments in the
energy sector. Energy exports will continue to help increase international
“The economy in Alberta has been improving and is expected to be one of the leaders in economic growth,” said Richard Cho, senior market analyst with CMHC’s prairie division. “That will naturally support the housing market.” Cho said CMHC’s forecast for Alberta hinges on continued job production, international and interprovincial immigration boosting population growth, and the price of oil staying high enough to encourage continued investment in the province’s energy sector.
Alberta’s expanding economy is requiring more workers and employment is projected to increase by nearly 3% in 2012. In 2013, job creation will ease marginally as employment is projected to rise by 61,000. Despite some variation in job markets, the province will experience a lower unemployment rate, which is projected to average below 5% through 2013. With a relatively tight labour market generating employment opportunities, those looking for employment are being drawn to Alberta. First quarter 2012 interprovincial migration was the highest first quarter amount on record going back to 1970. As the local labour market is not meeting all the demand of Alberta’s expanding economy, the province is experiencing an increase in temporary foreign
workers. In total, net migration is projected to reach 57,800 in 2012 and remain elevated at 48,500 in 2013. Migration flows are expected to be a positive factor contributing to housing demand over the forecast period.
Here are some highlights from the report:
- All four western provinces are expected to see growth in housing starts in 2012, with Alberta leading the way at about 23.7% growth.
- The construction of single-detached homes will decrease in half of
Canada’s provinces in 2012. Alberta will see the second strongest growth
in single starts at 15.8%. The differences in the regions generally reflects the stronger economic prospects in Canada’s western provinces – AB, SK & BC will grow, on average, 3.0% in both 2012 and 2013. This compared to 2.1% and 2.2% for Canada as a whole. Western Canada is benefitting from a robust natural resources sector, which is helping to push provincial growth forward.
- Alberta will lead the way in multi-family starts with 35.1% growth in 2012.
- On an annual basis, sales of existing homes through the Multiple Listings
Service® are expected to move slightly upwards in both 2012 and 2013 nationally due to moderate employment growth, lowinterest rates and modest personal income growth. Alberta will lead the way at 11.2% growth.
- Total net migration was 244,312 in 2011, essentially unchanged from 244,573
in 2010. The Canadian economy continues to outperform many others in the Organisation for Economic Co-operation and Development. Canada’s relatively more attractive labour market will lead to an increase in net migration to 255,000 in 2012 and 263,000 in 2013. These increases will help support Canada’s housing sector. For 2012, Alberta and British Columbia are forecast to have large amounts of net migration, further supporting housing in these regions.
According to an article in the Edmonton Journal, Oil has been trading around $90 a barrel since early August after reaching a yearly low of $79.69 in June.
Cho said the market has favoured buyers until recently and should move to a balanced state, boosting price growth in the process. The CMHC’s forecast calls for prices to rise 2.5 per cent this year and 2.8 per cent in 2013 across Alberta, bringing the average home sale to $372,300.