A Fredericton developer is banking on more room for growth in the city's condo market.

The Hanson Group is one of several companies building hundreds of new units this year.

Howard Hanson says the first couple of phases of Sandstone Developments off of Hanwell Road are already full and he's now developing 600 more units.

"We usually have the building probably half sold before we start," he said.

"The demand has been so that we can probably pre-sell 20 out of 40. Then we take a chance on the other 20 and it always works out."

Shawn Colpitts, another Fredericton developer, says the demand comes from people migrating to the city from elsewhere in the province, or from other countries, such as Korea and China, and from people who get divorced and need a second family dwelling.

Thelma Innes, a veteran Fredericton realtor, says sales overall are down slightly year-to-date to $312 million at the end of September compared to $314 million last year.

But the demand for small housing is increasing, she said.

Innes said she believes that is due, in large part, to baby boomers.

"We're downsizing from those big two-storeys for reasons of health, or for reasons that we want to take the equity in our homes and travel and do other things," she said.

"So there's a lot of movement within people themselves and real estate is always central to those changes in lifestyle."

Claude Gautreau, an analyst for the Canadian Mortgage and Housing Corporation, says Fredericton is one of only two centres in the province that has seen significant population growth over the past decade, the other being Moncton.

Fredericton also had one of the lowest vacancy rates in the province during the last rental market survey, said Gautreau.