Home prices rise; vacancy rate falls

Immigration and rising home-ownership costs strengthened demand for rental housing this year, a trend that may continue as home prices are expected to maintain their upward climb into next year, according to two housing reports released yesterday.

However, the appetite for home ownership among Canadians is likely to remain strong in 2007 despite higher home prices, albeit at a more moderate rate than in 2006.

Solid job creation and healthy income gains have strengthened demand for both home ownership and rental housing across the country, according to the Canadian Mortgage and Housing Corp.

The average rental apartment vacancy rate in Canada's 28 major centres declined by 0.1 of a percentage point to 2.6 per cent in October, compared with last year, the agency said.

New immigrants renting their first homes -- particularly in major urban centres -- and the widening gap between the cost of home ownership and renting were the key factors that fuelled more rental demand over the past year, said CMHC chief economist Bob Dugan.

Canadians' appetite for home ownership reached record levels in 2006, according to a report by Royal LePage Real Estate Services.

Nationally, the average price of a detached bungalow rose 16.2 per cent to $304,271 in the fourth quarter, compared with a year ago.

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GREAT DIVIDE IS WORST IN THE WEST

- In B.C., vacancy rates declined in Vancouver by 0.7 of a percentage point to 0.7 per cent and in Abbotsford by 1.8 percentage points to two per cent.

- Lowest urban vacancy rates: Calgary at 0.5 per cent, Victoria at 0.5 per cent and Vancouver at 0.7 per cent.

Average price for detached bungalows in the fourth quarter, according to Royal LePage Market Survey:

- Calgary: $408,833, up 50.1 per cent from $272,289

- Vancouver: $707,500, up 15.7 per cent from $611,250

- Victoria: $380,000, up eight per cent from $352,000

(Source: Vancouver Province)