Home prices could rise for decades

Bubble — what bubble?

Canadian home prices, already on a tear for years, are expected to grow on average almost 4 per cent a year over the next decade and a half, a Toronto-Dominion Bank report said Thursday.

The pace of growth will fluctuate from region to region. On the whole, however, prices are seen rising as more people choose to own homes, wages climb and unemployment remains low. Canadian house prices are already 10.8 per cent higher than last year, according to Statistics Canada.

“The combination of weaker demographic demand for housing is likely to be offset by rising home ownership rates, rising personal income, a modestly lower long-term rate of unemployment and more modest construction of new homes,” wrote the report's author, chief economist Craig Alexander.

House prices in Alberta will continue to streak upwards, albeit at a slower pace than in recent years, the bank said.

“All of the stars are aligned for Calgary and Edmonton to experience above-average price growth in the future,” said Mr. Alexander.

“However, it should be stressed that the recent pace of price gains in these markets have been completely unsustainable and will eventually come back to earth when the housing markets become more balanced.”

In Calgary, house prices were a whopping 56 per cent higher this July from last July, while in Edmonton, they've rocketed by almost a third in the past year.