Alberta’s economy showed signs of continued growth during the last business quarter, according to Zonda Urban’s Q3-2021 State of the Market report.
With oil prices rising and total investment in up-and-coming sectors totalling $16 billion over the past year, expansion should persist through 2022. This sentiment is further reinforced by major financial institutions such as RBC and ATB, who are forecasting economic growth of nearly six per cent in 2021 and four per cent in 2022 for the province.
Alberta attracting investment dollars as oil prices rise
In the third quarter of 2021, unemployment levels in Edmonton decreased by a full point to 8.7 per cent, while Calgary’s unemployment levels remained stable at 9.7 per cent. Labour force totals and participation rates also rose slightly in both major cities on a quarterly basis.
Thousands of new jobs are expected to be created in Alberta over the next few years due to a rise in international investment. Calgary will become home to a new cloud computing hub as a result of Amazon’s $4 billion investment in the province. Alberta has also attracted major investment for clean energy projects including solar panel farms and hydrogen plants.
The province’s growing labour force and a potential influx of inter-provincial and international migration is expected to fill new job openings in the coming years.
Oil continued its strong push as prices and global demand rose once again in the third quarter of 2021. The West Texas Intermediate (WTI) spot price was seven percent above last quarter’s average and remains at over $70 per barrel.
Alberta’s average weekly earnings remained flat compared to the previous quarter, while insolvencies filed by consumers and businesses were down 22 per cent on a quarterly basis and 27 per cent on a yearly basis. Mortgage delinquencies in Calgary and Edmonton also decreased by seven and 10 per cent, respectively on a yearly basis.
Multi-family markets see increased investment, sales
The housing market experienced increased activity with $4.3 billion dollars of total investment in the quarter. Investment in Calgary and Edmonton’s multi-family home markets increased by 15 and 16 per cent compared to last quarter. Alberta building permit values also increased by four per cent on a quarterly basis and 29 per cent on a yearly basis.
Total housing starts decreased by eight per cent on a quarterly basis but remain 28 per cent higher compared to the third quarter of 2020. Townhome starts in Edmonton increased for the second consecutive quarter with a total of 380 starts. This is the highest amount of quarterly townhome starts in Edmonton in over a year.
Though new multi-family home supply is low, actively selling projects in Edmonton sold relatively well compared to previous quarters. This is similar in Calgary, where supply continues to drop but sales per project remain relatively high.
Net per square foot rents in Calgary and Edmonton rose by five per cent and two per cent, respectively compared to last quarter. Vacancy rates for the purpose-built rental market in Calgary continue to decrease along with released and available units. Edmonton continues to experience high vacancy rates in downtown rental units.
Strong housing start numbers should offset the lack of new housing supply in the market, where new multi-family inventory totals have decreased by over 40 per cent within the past three years.
New multi-family home prices and net per square foot rents have increased marginally compared to last quarter, which should contribute to the absorption of incoming housing stock.
Despite Alberta recording a negative net migration total in the second quarter of 2021, the increase in expected job creation over the next few years should result in this trend being reversed.
