Home prices double in 10 years

Real estate markets across Canada posted solid gains over the past decade, and the economic fundamentals remain in place for continued, but more moderate growth. Between 1997 and 2007, average home prices in Canada almost doubled, to C$307,265 ($304,705) in 2007 from C$154,606 in 1997, for a 7.1 percent annually compounded rate of return, according to a report published by Re/Max.

The number of homes sold nationally rose over 57 percent to more than 500,000 last year from 331,092 in 1997. “Never before have we seen such a continuous run up in Canadian real estate,” Michael Polzler, an executive vice-president at Re/Max, said in a statement.

Low interest rates, a robust job market and strong consumer confidence were all credited as drivers. Immigration and domestic migration to tap Western Canada’s booming economy also helped lift demand.

Real estate considered cheap by international standards attracted droves of U.S., European, Middle Eastern and Chinese buyers to the Canadian market over the past decade, according to Re/Max.

The booming energy sector in Western Canada drew job seekers from across the country to that region, helping the housing market lead the way in terms of growth. “Given the continuation of sound economic fundamentals, it’s expected that residential real estate markets across the country will continue to experience healthy activity, albeit at a more moderate pace,” the report said.

In its 2008 housing outlook, released in the fall, Re/Max said it expected the domestic market to stay strong, but the red-hot growth seen in 2007 would likely cool, partly due to the economic slump south of the border.