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- Data sources and methodology
- Housing market in 2009: Resale prices increased faster than new housing prices
- Apartment and condominium market share lost ground
- Atlantic Canada: Newfoundland and Labrador posted fastest growth
- Quebec: A vigorous housing market in 2009
- Ontario: Resale prices reach new peaks
- Manitoba the only Prairie province recording rising new housing prices
- Saskatchewan: Mixed year in both new housing and resale prices
- Alberta: Market prices continued to decline for most of the year
- British Columbia: Volume of resales increases in Vancouver
In general, Canada's housing market underwent a mixed year in 2009 after several years of relatively solid growth. Although the population continued to increase, demand for housing was constrained in the early part of the year by the global economic downturn, decreasing labour market activity and lower consumer confidence.
On average, new housing prices last year were 2.3% below the 2008 average. Even though they rebounded in the second half of the year, new housing prices as of December 2009 were still 1.7% below their peak month of September 2008. New housing prices declined in the first half of 2009 as the market felt the impact of the economic downturn that started late in 2008. However, in the second half, Canada's housing market prices started to move up, due to strong resale price increases.
On the other hand, average annual home resale prices were up 5.0% on average over 2008. In fact, home resale prices in December 2009 reached a record high, a full 5.7% above their previous peak. Resale prices were essentially flat in the first quarter but rose strongly in subsequent quarters.
The volume of resales reached 465,251, up 7.7% from 2008. However, the number of transactions was still 10.7% below the peak year of 2007. At the same time, the number of building permits issued by municipalities for residential units (single homes, doubles, row housing, apartments, and condominiums), was down 19.9% in 2009 from 2008 and 32.5% below the peak year of 2004.
Economic activity picked up in the residential building construction sector after beginning the year with the smallest number of new units approved since 1996. By the fourth quarter, the number of units had more than doubled from the first quarter low. Economy-wide, hours worked, as reported by the Labour Force Survey, fell in the first half of the year, but showed an upward trend starting in May 2009 in most provinces.
Provincially, Newfoundland and Labrador recorded the fastest provincial increases in both new housing and resale prices, due to a solid economic activity and a growing population. Elsewhere in the Atlantic region, price gains were moderate, but they however reached new all-time highs.
In Quebec, new housing and resale prices continued to climb, reflecting steady population growth and increased labour market activity. Ontario, however, saw no change in new housing prices though resale prices recorded new peaks. Overall, housing prices in Ontario reflect the gradual economic recovery that unfolded during the year, especially in the manufacturing sector.
On the Prairies, only Manitoba posted new housing price increases, although the resale market rose moderately in both Manitoba and Saskatchewan. In Alberta, the economic slowdown saw housing prices—both new and resale—continue to decline in 2009. In British Columbia, new housing prices were down 6.5% in 2009, but resale prices advanced 2.4%. Soaring resale transactions in the Vancouver area pushed the provincial average resale price to a record high.
This study examines changes in housing market prices in Canada in 2009 using the New Housing Price Index, home resale prices, number of resale units, and data on the number of new units approved by municipalities. It highlights changes in housing market prices throughout the period in the provinces and major cities.
2 Data sources and methodology
New Housing Price Index
The New Housing Price Index (NHPI) is a monthly series published by Statistics Canada that measures changes over time in contractors' selling prices of new residential houses. Detailed specifications pertaining to each house remain the same between two consecutive periods. The survey also collects contractors' estimates of the current market price value of the land which is included in the measurement of price changes.
The NHPI surveys builders in 21 metropolitan areas who build houses in such volume or in such a fashion that they can report selling prices for comparable transactions. In addition to pricing data, the NHPI obtains detailed information describing physical and non-physical characteristics of each model home. Reported prices are adjusted for changes in quality of structure and land, so that the NHPI attempts to measure real changes in price over time of identical housing in consecutive periods.
Source: Statistics Canada, New Housing Price Index, CANSIM table 327-0005.
Building Permits Survey
The monthly Building Permits Survey of Canadian municipalities collects data on the number of dwellings authorized and value of construction projects in the residential sector. Survey detail includes the type of construction, such as single and semi-detached homes, apartments, condominiums and row housing units.
Source: Statistics Canada, Building Permits Survey, CANSIM table 026-0001.
Multiple Listing Service
Data on home resales come from the Multiple Listing Service® (MLS®) figures, compiled through the Canadian Real Estate Association and available from the website of the Conference Board of Canada. Average actual sale prices include all types of residential units. Changes in prices reported are not adjusted for changes in the composition of the stock of units sold or for the changes in quality or specifications of houses. Data are aggregated by city, province and for Canada as a whole.
Source: Statistics Canada, Population Estimates and Projections, CANSIM table 051-0001.
Source: Statistics Canada, Mobility and Migration, CANSIM table 051-0012.
Gross Domestic Product
Source: Statistics Canada, Income and Expenditures Account—Expenditure-based, CANSIM table 380-0017.
Source: Statistics Canada, Labour Force Survey, CANSIM table 282-0092.
Except for the NPHI, national data presented in this study include all provinces and territories.
3 Housing market in 2009: Resale prices increased fasterthan new housing prices
After several years of relatively solid growth across the country, Canada's housing market began to show signs of weakness in 2008. The year 2009 started with falling new housing prices and a flat resale market, but this gave way to rising prices later in the year.
The housing market saw a generally mixed year in 2009. The population continued to grow but demand for housing was constrained in the early part of the year by the global economic downturn, decreasing labour market activity and lower consumer confidence. The number of hours worked decreased 1.4 % from January to June, but slowly began increasing in the second part of the year.
The economy displayed signs of a modest recovery around the middle of the year, and further improvements in the final three months of 2009. Gross domestic product declined 2.6% in 2009, but showed positive signs in the second half of the year. These economic conditions affected price movements in the housing market.
In 2009, new housing prices were 2.3% below the 2008 average. Even though they rebounded in the second half of the year, new housing prices as of December 2009 were still 1.7% below their peak month of September 2008.
Home resale prices, however, were up 5.0% on average in 2009 compared to the 2008 annual average. The previous high point for resale prices was in December 2007, after which prices mostly declined for 13 months to their lowest point in January 2009. Resale prices in December 2009 were a full 5.7% higher than their previous high.
The number of home resales reached 465,251 in 2009, up 7.7% from the previous year but still 10.7% short of the peak reached in 2007. MLS data reported a peak for home resales of 521,051 in 2007, falling to 431,823 in 2008, the lowest for any year since 2002.
The number of building permits issued for new residential units was down 19.9% in 2009 from 2008, and down 32.5% from the peak construction year of 2004. The number of new residential units in the first quarter of 2009 was the lowest since 1996, but the number rose in the last three quarters of the year.
4 Apartment and condominium market share lost ground
During the 2000s, the composition of housing unit construction in Canada changed. A growing share of construction was devoted to apartment and condominium units rather than single detached homes. However, this trend reversed slightly in 2009.
Apartment and condominium units' share of residential construction rose from 20.1% in 2000 to 38.0% in 2008, then slipped to 34.8% in 2009.
Notwithstanding the 2009 slip, the growing share of apartments and condominiums is more obvious in the largest urban centres. For example, the share of residential construction accounted for by apartments and condominiums in 2009 was at 58.4% in Montréal and 49.7% in Toronto. Although the share of apartment and condominium construction has fallen in the last two years in Vancouver, it still accounted for 46.2% of residential units approved in 2009, well above the national average of 34.8%.
This rise could be explained by land shortages in cities such as Québec, Montréal, Ottawa and Toronto. Builders can maximize the use of the space available by selling more dwellings on one lot when they build apartment and condominium units rather than single homes.
5 Atlantic Canada: Newfoundland and Labrador posted fastestgrowth
While new housing prices were declining or, at best, rising marginally in most provinces, only Newfoundland and Labrador showed double-digit advances in 2009. New housing prices there rose 11.5% from 2008, and resale prices advanced an even stronger 15.6% compared with their average 2008 value. Both markets ended the year at all-time highs.
Housing demand in the province was higher due to a growing population and positive net interprovincial migration, two factors that changed in recent years. After declining since the early 1990s, the province's population rose in 2008 and 2009. Net migration between Newfoundland and Labrador and other provinces was also positive in 2009 for the first time since the early 1980s.
Economic activity was also solid in Newfoundland and Labrador in 2009. The total number of hours worked increased 4.1% from July to December 2009, the second highest provincial increase, exceeded only by Prince Edward Island, where hours worked increased 5.0% during that same period.
Elsewhere in the Atlantic region, price increases were much more moderate but still reached all-time highs. Resale prices rose 4.4% in Prince Edward Island and 3.6% in Nova Scotia in 2009 over 2008 average values; new housing prices increased about 1.0% in both provinces. In New Brunswick, new housing prices were up 3.3% in 2009; resale prices gained 6.3% over the year.
6 Quebec: A vigorous housing market in 2009
Both new housing and resale prices continued to climb in Quebec in 2009, reaching new highs. New housing rose 3.2% from 2008 across the province, and 6.9% in Québec, almost three times more than the 2.4% price increase in Montréal. Resale prices across the province gained 4.7% in 2009, up from a 3.7% advance in 2008.
The steady population growth of about 1.0% per year over the last few years and the improvement in economic conditions as reflected by the rising number of hours worked, both maintained a vigorous housing market in the province in 2009. Apart from a decrease in August 2009, Quebec's hours worked have been showing an upward trend since May 2009. In the provincial capital, rising new housing prices may have also been affected by a scarcity of land available for residential development, according to city officials.
7 Ontario: Resale prices reach new peaks
Housing price movements in Ontario in 2009 appear to reflect the economic recovery that developed during the year. A sector of key importance in the province is the goods-producing sector which includes manufacturing industries. National GDP figures show the goods-producing sector gained 2.1% in fourth quarter, the first quarterly increase since the second quarter of 2007. 1 These gains built largely on growth in the manufacturing sector which is concentrated mainly in Ontario. Indeed, the number of hours worked, for the total economy in Ontario, increased 1.0% from July to December after decreasing in the first part of the year.
For the year as a whole, new housing prices were flat: they declined slightly in the early part of the year, then gained slowly but steadily in the last six months. Average annual new housing prices remained at peak levels provincially, averaging the same in 2009 as in 2008. In Ottawa, they were up 1.5% in 2009 compared with 2008, but in Toronto they were down slightly for the year.
Resale prices rose 5.3% in 2009: a very weak first quarter was followed by substantial advances in the remaining three. By the end of the year, resale prices were much stronger than new housing prices, and had reached new peaks both provincially and in the cities of Ottawa and Toronto.
8 Manitoba the only Prairie province recording rising new housingprices
The average number of hours worked slipped 1.0% in 2009 from 2008, revealing some signs of slowing in the Manitoba economy.
New housing and resale prices both grew more slowly than in previous years, but remained positive, rising 2.5% for the year in new housing and 5.8% for resale homes, establishing new record high average annual prices in both cases.
Manitoba was the only Prairie province to post rising new housing prices in 2009. New housing prices have been relatively stable since mid 2008.
9 Saskatchewan: Mixed year in both new housing and resale prices
Price performance in Saskatchewan's housing markets was quite varied in 2009. Over the year, new housing prices were down 1.4% from their average in 2008, but resale prices rose 4.1%. Both markets were stronger in the second half of the year than in the first half.
Housing prices in Regina and Saskatoon both reached record highs in 2008, in both new housing and resale markets. In 2009, prices continued to climb in Regina but fell back in Saskatoon. However, by the end of the year prices began to advance again in Saskatoon in both new housing and resale markets. The number of hours worked also started rising in the second half of 2009.
10 Alberta: Market prices continued to decline for most of theyear
The economic slowdown that followed record growth years in 2006 and 2007 saw housing prices decline in both the new and resale markets. New housing prices peaked in 2008 but lost 9.0% in 2009. The number of hours worked also declined, 4.8% in 2009 compared with 2008. This was the largest decrease in hours worked in 2009 among all the provinces. The drop was most pronounced in the first half of the year.
On an annual basis, resale prices peaked in 2007 and have been declining for two years, losing 0.9% in 2008 and 3.3% in 2009.
The positive news was that both markets appeared poised for a turnaround by year's end. New housing prices were flat in the third quarter and up slightly in the final quarter. Resale prices grew in the last three quarters, rising 5.1% in the third quarter alone.
Both new and resale market prices were down in both Calgary and Edmonton for the year, but resale prices were resurging strongly by the third quarter, rising 4.2% in Calgary and 7.9% in Edmonton compared to the previous quarter. New housing prices remained weaker in both cities, continuing to fall in Edmonton but rising slightly in Calgary.
11 British Columbia: Volume of resales increases in Vancouver
New housing prices were down 6.5% in British Columbia in 2009 compared with 2008, but home resale prices advanced 2.4%, reaching a record high annual average price. However, home resale prices were down in Vancouver and Victoria.
The higher annual provincial average resale price is the result of more transactions in the Vancouver area combined with resale prices that remained above the provincial average. The volume of business in Vancouver reached all-time highs in the last six months of 2009. The Vancouver share of total provincial transactions in 2009 reached 42.6%, compared with 36.5% in 2008
New housing prices in Victoria declined 7.8%, more than the provincial average; Vancouver prices fell 6.3% for the year. Resale prices lost 1.8% in Victoria and 0.2% in Vancouver in 2009 compared with annual 2008 numbers.
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