Alberta may be booming but the new housing market in its two largest cities are performing quite differently.
Calgary new home price gains were again the highest of the major centers surveyed according to Statistics Canada’s New Housing Price Index (NHPI) released today.
The NHPI for Calgary increased 7.6% y/y in May and was up 0.8% from the previous month. In contrast, Edmonton prices were flat on an annual basis with a 0.3% monthly advance.
While Alberta’s economy is strong, there are factors in play that are restricting it from becoming a repeat of 2006/2007.
“A sudden population surge had homebuilders behind the curve last decade, which propelled rents and prices skyward. There’s little doubt that both are accelerating again, particularly in Calgary where the MLS Home Price Index has surged more than 10% in the past year, lifting prices above the 2007 peak. However, the large number of homes started late last cycle has the housing market in better balance than during the prior boom, even though the market is again tight. There is currently 3.4 months’ worth of resale supply across Alberta versus a scant 1.2 at one point in 2006, and strong recent price gains in Calgary still look tame versus those seen in the mid-2000s, when prices doubled in the span of 2½ years. Still, Calgary’s market clearly remains the strongest among major Canadian cities.”
If you look at the charts below, you can see how new home prices skyrocketed in 2006 in both Calgary & Edmonton. Since that boom, both markets have been trending differently.
Edmonton new home prices are still below peak and have flatlined for four years now and counting.
After the correction, Calgary prices were listless for a couple years before finally finding its footing in 2012. Since December 2012, Calgary’s NHPI has posted a minimum 0.1% gain every month. The last time there was a m/m decline was December 2011. On a year-over-year basis, prices have been rising since February 2012.
It just goes to show how regional housing is, even within the same province.