In a testament towards the consistent upward trend in the Canadian Real Estate market, a new report by RE/MAX suggests that housing prices in this country have more than doubled in the last decade, rising from $163,951 to $339,030 in 2010.
Much of this price hike can be attributed both to new developments, but also to substantial amounts of money being poured into home renovation, supporting an increase in asset value.
Underscoring the sheer dollar impact that construction and renovation has on economic activity, RE/MAX said that the value of residential building permits issued nationally between 2000 and 2010 tallied at $340 billion and a further $450 billion was directed towards renovation existing properties.
RE/MAX suggests that this cash infusion has been responsible for keeping the construction industry robust for the past decade.
“While a number of external variables were also behind the exceptional gains, revitalization—amid an aging housing stock—and newer construction are largely underestimated factors supporting Canadian housing values,” says Michael Polzler, Executive Vice President, RE/MAX Ontario-Atlantic Canada. “The trend is expected to continue for years to come as investment in residential real estate through renovation, infill, and redevelopment ramps up across the country. City planners, builders, developers, and homeowners have only just begun.”
Infill has exploded across the country- in particular in areas where the value of structures currently occupying land has not increased at the same rate as the value of the land itself. This has contributed heavily to the changing complexion of neighbourhoods across the country, particularly in larger centres like Toronto and Vancouver, where land is at a premium, and is being snapped up to create housing on smaller lots, as well as many multi-family properties.
“Renovation has also had a tremendous impact on housing throughout the decade, so much so that it’s emerged as, arguably, Canada’s next national past time,” says Polzler. “Residential renovation spending has been gaining momentum year-over-year since the early part of the decade and now exceeds $60 billion annually.”
RE/MAX also attributes much of this asset gain in real estate over the last decade to population growth as well: “Since 2000, Canada’s population has experienced double-digit growth of 11 per cent. By 2031, over 42 million people are expected to call Canada home.”
“There’s no question that population growth will continue to support investment, propping revitalization and new construction in the years ahead, and by extension raising the bar and prices in real estate markets even further,” says Polzler.