Record low interest rates created a strong demand for a relatively low number of available homes in Canada in 2010, resulting in a higher average sale price, according to a new study.
The Canada Mortgage and Housing Corporation released its annual report, titled "The Observer," on Thursday, looking into the effect housing had on Canada's economy over the past year.
"Low interest rates, coupled with a small inventory of existing homes for sale, helped push the average MLS (Multiple Listing Service) price up by 5.8 per cent in 2010 to $339,042," the report stated.
And housing-related spending accounted for more than 20 per cent (or $330 billion) of Canada's Gross Domestic Product in 2010 -- a rise of 7.1 per cent from the $308 billion 2009, the report said.
The report also looked at the expected effect on Canada's housing market from the aging baby boom generation.
By 2036, the report suggested, the number of seniors in Canada will rise from 14 per cent to almost 24 per cent by 2036 -- a phenomenon that will have a direct effect on the real estate market.
"Aging baby boomers will generate demand for condominiums and for home adaptations and support services aimed at allowing them to continue living comfortably in their homes," the report stated.
"In addition, the population housed in institutions, such as nursing homes and hospitals, could potentially double by 2036 given the expected growth of the senior population."
Across Canada in 2010, construction crews and contractors were busy attempting to build the homes needed to meet the rising demand created by record low interest rates.
In total 189,930 new home starts were under construction in Canada in 2010, compared to 149,081 a year earlier.
In Vancouver over half the new starts were in the condo market. In Montreal, 48 per cent were condos and in Toronto, 45 per cent were intended for condominium use.
Overall in major urban centres across Canada, condos accounted for one-third of all housing starts, up slightly from 29 per cent in 2009.
Although Canadians were buying homes at higher prices than in 2009 and the number of units under construction was significantly higher, fewer actually bought homes compared to a year earlier, the report said.
"After moderating in the first half of the year, sales of existing homes through (MLS)rebounded in the second half of 2010. Overall, MLS sales reached 446,577 units in 2010, down from 464,547 in 2009."
The study broke down the number of residents who own their own homes by municipality, and found that Cape Breton, N.S. had the highest proportion with 75 per cent of residents living in their own home.
Calgary followed with 73 per cent of residents owning their own home, then Kelowna, B.C. with 72 per cent and Thunder Bay, Ont. at 71 per cent and Oshawa, Ont. at 70 per cent.
In Vancouver only 48 per cent of residents owned their own home, in Winnipeg, 65 per cent, in Toronto, 54 per cent and Montreal, 34 per cent. In St. John's, N.L., 64 per cent of residents owned their own home.
