If we just look at the national numbers, the headline “pandemic spurs strong growth in house prices” would be true. Unfortunately, we have to add “but not in Alberta.”
Residential Property Price Index data from Statistics Canada show that the average price of residential properties (both new builds and resales) in six major metro areas* increased by 8.5 per cent between the fourth quarter of 2019 and the same quarter in 2020.
The situation in Calgary is very different with the index down by 0.9 per cent over the same period—the only decline among the six markets.
It’s dangerous to use Calgary as a proxy for other parts of Alberta given the wide variation in local housing markets (prices in Canmore have, for example, spiked during COVID). Nonetheless, it points to three factors that set the province’s overall housing price trajectory apart from places like Toronto and Vancouver.
First, Alberta went into the pandemic already dealing with a sluggish economy. Alberta’s economy grew by only 0.1 per cent in 2019 compared to 1.9 per cent nationally.
Second, the oil price crash that accompanied the pandemic in 2020 was an additional drag on the provincial economy and its housing market. Resale activity surged in the fourth quarter and prices inched up, but they were still down by 1.2 per cent compared to 2019.
Third, the downward trend in prices dates back to the provincial recession of 2015-2016. While the composite index increased by a whopping 19.7 per cent between the first quarter of 2017 and the fourth quarter of 2020, it fell by 4.2 per cent in Alberta. Prices were up across all categories (new, resale, house, condo/apartment) in the other five metros, but were down in each category in Calgary.
While owners would like to see the value of their property rise, the good news in all this is that Calgary and Alberta in general are much more affordable places to purchase a home than markets like Ottawa where the price index is up by 42.6 per cent since 2017 or Toronto where a modest single-detached home will cost you over $1 million.
*The Residential Property Price Index covers the market for new houses and condominium apartments and the resale market in the census metropolitan areas (CMAs) of Montreal, Ottawa, Toronto, Calgary, Vancouver and Victoria, and for a composite of these six CMAs. The Index begins in 2017.