Real estate is classified as one of the greatest personal financial assets one can own in Canada. Some statistics have estimated that, more than 70 percent of Canadians posses their own personal homes (Alexander, 2006). The value of all residential homes in the country is estimated to amount to more than 2 trillion dollars. Given the current demand for personal homes, the future financial plans of most Canadians includes the value of owning homes. The increased desire for most people to own personal homes and yards has been attributed to the various demographic and market factors.
Some of these factors include; an aging population and a low inflation economy which has been sustained over time. Demographic factors have been cited as the greatest contributors to the current demand for personal housing in Canada. Statistics show that, Canada experiences a medium growth in its population and medium rates of immigration as well. The high number of people who are retiring from their jobs and retracting back to their homes has increased the demand for personal homes in the country.
In addition, the demand for residential homes has also risen as a result of the net growth rate of household formation. However, this rate is expected to decline from the current 1. 4 percent to around 0. 8 percent by the year 2030 as a result of an aging population in Canada (Alexander, 2006). As much as these factors have led to an increased growth in the number of personal homes and residential estates, the same factors are likely to result into higher home prices in the near future.
For this reason, the average price of personal homes is expected to increase by about 4 percent per annum over the next 20 years or so. The future trend for personal housing is also expected to change in the next few years due to the increased reliance of Canada’s population growth rate on immigration. Initially, Canadian immigrants preferred rental accommodation but this trend has recently changed, as most immigrants now seek to own their own personal homes. In this case, the rate of household formation is bound to increase.
However, some demographical statistics suggest that, the rate of new homes construction is bound to go down in future as a result of an aging population. In this case, it is predicted that the rate of personal housing is likely to reduce from 175,000 housing units per year as it stands today to around 125,000 housing units per year in the year 2030 (Alexander, 2006). Historically, those Canadian cities with a problem of land scarcity have been found to posses the highest demand for personal housing.
These cities which include Vancouver, Toronto and Montreal have hence been found to have the highest price gains in house prices over the past two decades or so. By the year 2030, the housing demand in these cities is expected to increase above the current national average, especially in Toronto and Vancouver, due to the increased rate of immigrant growth. Other cities in Canada which are expected to experience a rise in housing demand in the near future include Edmonton and Calgary, as a result of more stable conditions in the labour market.
On the other hand, a few cities are likely to experience lower housing demands than in the past, due to less supportive demographics presented by the low population growth. It can thus be concluded that, though the current demand for personal homes in Canada is quite high, the future number of new housing levels is likely to be moderate the demand for more personal houses is bound to increase, due to the aging Canadian population.
The entry of new house levels is largely dependent on the rate of immigration and in this case, any slight increase in the number of immigrants will shift the demand for housing to a high end. Reference. Alexander, C. (2006). Long-term outlook for Canadian homes. Canada Special Reports. Retrieved on 21 November, 2008, from <<http://www. td. com/economics/special/ca0906_home_prices. jsp. >>