SOMBA K'E/YELLOWKNIFE - New home construction in Yellowknife posted minimal gains while the amount of home resales in the city dropped by 21 per cent last year, according to recently-released information from the Canada Mortgage and Housing Corporation (CMHC).

Regine Durand, market analyst for the Canadian Mortgage and Housing Corporation, speaks at the 10th annual Yellowknife Housing Forum in 2009. This year's forum has been pushed back to May, but numbers detailing the decline in home resales in Yellowknife last year were recently released to Yellowknifer by the corporation. - Guy Quenneville/NNSL photo

In 2009, 11 new homes were constructed in the territorial capital, compared to 10 the previous year.

Home construction is still down considerably from previous years – down 59 per cent from 2007, when 27 homes were constructed, and down 65 per cent from 2006, when 31 new homes were built.

Originally, the CMHC predicted between 10 to 15 new homes would be built in 2009.

"We had two factors that really played a hand in 2009. First, we saw some job losses, so we've seen a drop in employment numbers. That affected demand for housing," said Regine Durand, the NWT market analyst for CMHC.

In late 2008, De Beers Canada ended a contract with Procon Mining and Tunnelling, cutting 105 jobs at the Snap Lake diamond mine. Last year, the company cut 128 direct positions (including 16 NWT residents).

Similarly, Diavik Diamond Mines Inc. scaled by the contract staff building the underground workings of the Diavik mine.

"We did see fewer people moving, of course, with fewer job opportunities," said Durand.

While the average resale price in Yellowknife increased to $326,000 from $318,000, the number of actual sales fell to 330 from 419.

"Given the economic uncertainty we think that people were waiting before going in, making a down payment," said Durand. "Another factor that affected resales was the price growth. We did see a three per cent increase in home resale prices."

"That's probably pretty close, actually," said Ken Pearman, a realtor with Coldwell Banker, of the 2009 average resale home recorded by the corporation. He added Coldwell Banker had an "average" year in terms of sales.

Durand she expects the sales climate will grow more positive this year.

"Moving forward, what we have seen is there has been increased affordability," she said. "Resale homes have become more affordable … because of the low mortgage rates. The average mortgage rates went from 6.4 per cent in 2008 to five per cent in 2009. As a result, mortgage payments dropped by 10 per cent.

"The gap between renting and owning was cut by half."

The ownership premium – which Durand described as the difference between a monthly mortgage payment and monthly rent – decreased to $254 in 2009 from $500 the previous year.

"We do expect a pick-up in housing demand due to improved affordability," she said, adding that the green-light of the $16.2 billion Mackenzie Gas Project will due much to boost housing demand in the coming years.

Pearman forecast increased residential construction activity this year.

"For 2010, we think that we're going to see some construction in the marketplace," he said. "We think the time is ready for some new homes to be put in of various configurations, whether it's townhomes, mobile homes or a few houses. Probably right across the board."

Late last year, following reports of increased diamond demand worldwide, De Beers Canada announced it was ramping up production at Snap Lake, requiring 175 additional operations staff at the mine by the end of this year.

The Diavik mine is scheduled to begin underground production next week. Between now and 2012, the mine will operate as a combination underground and open pit operation, resulting in a larger than normal staff contingent at the mine site.

CMHC's annual Yellowknife Housing Forum, which typically takes place in March, has been pushed back this year to May 18.