Oil capital of Canada sees home prices jump as newcomers rush in

HOME prices in Canadian oil country are surging, driven by a rush of newcomers from abroad – as well as from more expensive markets across the nation.

Calgary – the largest city in the oil-rich province of Alberta – saw its benchmark home price in June rise 1.5 per cent from a month earlier, according to data from the Canadian Real Estate Association released last Friday (Jul 14).

Prices in Calgary have gone up 4.2 per cent in a year, the biggest increase among the more than 50 markets the group tracks. It’s the only major Canadian city to experience any increase at all. The benchmark price in the city has risen 34 per cent in three years. 

Spurring the demand for homes is an influx of international arrivals as Prime Minister Justin Trudeau pushes immigration to record levels to fuel Canada’s economy. But Calgary is also seeing a stampede of new residents from other Canadian cities, where buying a home is out of reach for many. Even after the recent gains, Calgary’s benchmark price of C$538,000 (S$537,000) is less than half that of Vancouver and Toronto.

Alberta’s population was 4.7 million as at Apr 1, up 4.5 per cent in 12 months, trailing only tiny Prince Edward Island for the fastest growth among Canada’s provinces. Alberta had the largest net interprovincial gain – almost 15,800 people – of all of the country’s provinces and territories in the first quarter. International migration contributed almost 36,000 new residents.

Unlike previous surges in Alberta’s population that were driven by the oil industry’s demand for labour, this boom is happening during a relatively tame period for the province’s most important industry. US benchmark crude is down about 20 per cent over the past year, and the major Calgary-based oil producers are not making significant moves to expand output, instead using cash to pay down debt, boost dividends and repurchase shares.

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The number of home sales in the city increased 7.1 per cent from a month earlier, compared with a 1.5 per cent national increase, seasonally adjusted.