Go West Young Man
The 9.8% average rise in house prices across Canada over the past year tells only half the story. Price increases of between 1% and 7% from Ontario to the east coast provinces were boosted dramatically by a 50% rise in Alberta property prices, the beneficiary of Canada's booming economy.
Energy boom keeps Alberta ahead
Oil-rich Alberta has benefited greatly from record energy prices, as 42,000 people moved there to take advantage of high-paying jobs last year — an almost four-fold increase on 11,000 the year before. Consequently the increased population has put pressure on local housing, particularly in the cities of Edmonton and Calgary, where prices rose in July 2006 by 4.7% and 6.9% respectively, against 1.4% for the rest of the country. And while the rising cost of construction materials and labour is cooling price rises across the country, a surge in demand in Alberta is due to a shortage of suitable building plots.
In the face of modest price increases across the rest of the country, Alberta is experiencing high levels of demand, currently out-pacing available inventory because of the confidence generated by significantly higher incomes. High demand for energy bodes well for Alberta's short-term property climate.
Property increases unlikely to continue
Some commentators claim that because new home construction in Alberta is due to tail off from a record 49,000 units next year to 45,000 units in 2007, this will signal the end of the current boom. Mortgage lenders are also concerned that the current price hikes and over-heated market are dangerous for the medium-term investor.
Despite continuing low interest rates, there is the danger that if prices rise too high and coincide with an economic slowdown, the boom could end abruptly.
Think carefully before securing other debts against your home.
Your home may be repossessed if you do not keep up repayments on your mortgage.
The overall cost for comparison is 7.1% APR. The actual rate available will depend upon your circumstances. Ask for a personalised illustration. There may be a fee for the mortgage advice. The precise amount will depend on your circumstances, but we estimate it will be 1.5% of the loan amount with a minimum fee of £500 added on to the loan.
Mayfair Consulting Limited is an Appointed Representative of The Mortgage Times Group Limited, 279 Tottenham Court Road, London , W1T 7RJ , which is authorised and regulated by the Financial Services Authority no. 303007.
