SOMBA K'E/YELLOWKNIFE - More new homes were built in Yellowknife last year and more apartments were available - but fewer houses were sold, according to the newly released Canadian Mortgage and Housing Corporation's (CMHC) Northern Housing Report.

New home construction in Yellowknife increased for the first time in five years, with 16 units built in 2009, compared to 12 units in 2008, said the report. The CMHC report also stated low mortgage rates and move-up buying contributed to the increase.

But "the activity levels remained low compared to the preceding 10-year average of 111 units," it added.

As for this year, the corporation said the activity will increase to about 20 units while staying historically low.

The resale market decreased by about 20 per cent, down to 330 residential sales in 2009 from 419 in 2008, according to the CMHC report. The corporation also expects a three-per cent increase in housing prices, with average residential prices predicted to reach $335,400 this year. That could be attributed to a decrease in supply and more expensive homes being sold, said Regine Durand, a market analyst with the corporation.

Renters have more choices when searching for an apartment since the vacancy rate rose to six per cent in 2009 from 0.9 per cent in 2008, according to the report.

The corporation's survey found 108 units vacant last October, out of the 1,782 privately-owned apartments available, compared to 18 vacant apartments in 2008.

This year, the vacancy rate is expected to drop to 4.7 per cent in October - higher, said Durand, than the five-year average of about three per cent. She added the rise in unemployment and the out-migration has impacted demand.

"We're going to see a slight improvement in demand for housing in this year, both for new homes, resale and rental housing thanks to the strong capital investment but this is a bit of a mixed outlook because all those numbers will remain low compared to the historical standards," said Durand.

"We are entering into a new cycle of growth because this is an improvement but it's going to take a couple of years before we see again those strong numbers, the strong new home construction activity."

Yellowknife Mayor Gord Van Tighem said the CMHC report has more positive points than negative ones.

"There is an increase in new housing construction - I wouldn't say for the first time in five years, but for the first time in three for sure," the mayor said.

"If all of the new housing starts that is being contemplated right now were going to occur, we would have a dramatic increase in inventory over the next year and a half.

"It's good in a time when the mines are looking for places for people to live here. The Armed Forces are looking for places for people to live here," said Van Tighem.

"If the vacancy goes up, that might be something that affects rent in a positive direction, but I would question that because the vacancies went down in more recent months."