A thriving economy continues to drive housing sales across the country, especially in the booming British Columbia, Alberta and Ontario markets.

Cameron Muir, CMHC senior market analyst in B.C., expects 2005 house prices to increase at only about half the rate they did last year, which was about 13 per cent, largely because fewer investors and first-time home buyers will enter the marketplace.

Nevertheless, he believes "the real estate market will remain robust through 2005 because we're looking at very strong fundamentals in the marketplace."

Muir says those fundamentals include continued job growth in the major urban centres - Vancouver, Kelowna and Victoria - especially among knowledge and scientific workers.

Gordon Maroney

The British Columbia Real Estate Association (BCREA) also credits the B.C. government for helping to create a favourable investment climate and a diversified economy, especially in the Lower Mainland.

While the BCREA doesn't produce forecasts, association president Gordon Maroney says that conversations with the province's different real estate boards have revealed a bright 2005. "To a person, they've all said the market is still very active and very buoyant, so if you want my own personal feeling, I don't think we'll do the numbers in terms of unit sales that we did in 2004, but we'll still have a very good year."

Spending on residential home sales in B.C. topped $27.8 billion in 2004, a 15-per-cent increase over 2003. The BCREA says that 96,316 units sold in 2004 compared to 93,126 in 2003.

"The best year on record for unit sales was 1992, and we saw 2004 exceed that by about 2,700 units," says Maroney.

The CMHC forecasts that in Vancouver, the number of sales will remain the same this year compared with 2004 at around 38,000, while the average sales price will leap to $390,000 from $373,000 in 2004.

In Victoria, the average price for a home is expected to rise to $320,000 from about $314,000, the CMHC predicts.

Across Canada, the Western Canadian housing market stands out as being particularly strong, Re/Max says.

"Alberta certainly stands to benefit from strong global demand for crude at close to $50 US a barrel," Elton Ash, vice-president and regional director, Re/Max of Western Canada, said in a news release. "Foreign demand is also expected to bolster coal mining projects in British Columbia."

Across the mountains in Calgary, the housing market has enjoyed the run of its life in recent years, and industry officials believe little will change in 2005. On a total dollar-volume basis, 2004 sales surged by almost 15 per cent to more than $5.9 billion.

Three hundred kilometres north of Calgary, Edmonton real estate agents are bracing themselves for another busy year.

"2004 was a record year, and we think we'll be able to do the same in 2005," says Jim Kulak, president of the Edmonton Real Estate Board (EREB).

"Last year we had $3.7 billion in sales and over 21,000 transactions. The average sales price (for a single-detached home) was around $201,000, and we're expecting a six-per-cent increase this year, so we're getting closer to that $214,000 or $215,000 mark."

He says that oil industry activity in Edmonton and northern Alberta remains strong and adds that these levels are expected to continue for the next few years, which in turn will fuel home buying.

"We may not be setting records every year, but we're going to have very good years in the future," Kulak says.

In Canada's largest metropolitan centre, low interest rates are a key reason why demand continues to grow. The Toronto Real Estate Board (TREB) also cites housing affordability, well- paying jobs and secure employment as other factors.

"People dream about owning their own home," says Ron Abraham, TREB president. "And it's good-paying jobs and low interest rates that are helping to make that dream a reality.

"(Home) prices continue to rise, but salaries are rising, too."

The TREB reports that 83,501 single-family dwellings changed hands in 2004, representing a rise of six per cent from the 78,898 sold in 2003. Abraham adds that 2004 prices jumped seven per cent to $315,231 from the previous year.

Meanwhile, the commercial real market estate will strengthen in 2005, says Colliers International in its recent forecast for 2005.

Certain industrial markets will experience a small development boom starting in 2005, with Toronto's new supply surpassing the 10-million-sq.-ft. mark again.

Vancouver and Calgary will both see significant build-to-suit and speculative-development activity pushing national totals to their highest levels in several years, the study notes.

Canada's office vacancy rate will decline by a full percentage point, based on recent trends in markets such as Toronto, where the downtown rate has dropped for enjoyed two successive quarters, as well as in Vancouver's where the office market has also turned the corner, Colliers says.

(John Ludwick can be reached at ludwick@businessedge.ca)