Calgary has taken the title of the strongest major housing market in the country. BMO Economics released a report Canadian Housing Update: Tale of Four Cities which examined the state of housing markets in four Canadian cities.

Calgary’s housing market was strong and now has shown the fastest growth in 15 years out of Vancouver, Toronto and Montreal.

“In three months to October, home sales have run 32 per cent above year-ago-levels – nearly twice the national rate – and stand a heady 20 per cent above past decade norms,” said Sal Guatieri, senior economist for BMO Capital Markets. “While preliminary data suggests the pace of sales slowed somewhat in November, listings are lean, giving the sellers the upper hand on pricing.”

Construction of new houses has picked up, but housing starts haven’t kept up with the pace of an exploding population.

The report showed that Alberta attracted 53,000 more people from other provinces than it lost in the past year, and a similar number from other countries. “Immigrants and young Canadians are flooding into the city, drawn by better job prospects, faster wage growth and healthier housing affordability than in Vancouver and Toronto.”

Alberta has the youngest population out of the 10 provinces, making the median age 36, and the population of first-time home buyers, 30 to 44 years-old. At 5.2 per cent, the growth is nearly five times faster than the national rate, the report explained.

“Strong economic and population growth will encourage an upward trend in Calgary’s house prices, though higher borrowing costs will moderate the gains,” said Guatieri.

“About half of the increase in prices is supported by rising income. Hourly wages in Alberta are up 4.4 per cent year over year in the first ten months of the year, double the national rate,” said Guatieri.

The report explained that the estimated values of houses remains reasonable, the prices will be about four-times the median family income and mortgage service costs consuming a manageable 23 per cent of earnings.

Laura Parsons, mortgage expert at BMO Bank of Montreal said, “While survey numbers tell us that the majority of Canadians will be able to service their mortgage in the face of rising interest rates, it’s still crucial that Canadians stress-test their mortgage against a higher rate to ensure they can afford what they sign up for if conditions change.”

The report said, “Propelled by energy exports, Alberta is the only provincial economy likely to grow faster than three per cent in the next two years.”