With housing prices rising fast in Toronto and the GTA and registering a 16.2% increase in the average selling price across the region in the past year, the city is no doubt just a short way off to reach Vancouver levels.
As we’ve previously shared on past real estate-focused blogs, there seems to be no stopping the acceleration of real estate prices in Canada’s two most expensive cities, although some would argue that an intervention is in order stop the two markets short from overheating.
Numbers Don’t Lie
The Real Estate Board of Greater Vancouver shared that prices in the city last April rose 25.3% compared to April 2015, shattering the record 23.2% numbers last March. You’ll need about $1,817,027 if you were to buy an average detached home in Vancouver last month, so just imagine what the figures will be at present time.
Meanwhile in Toronto, home price increases are spilling into the suburbs of Canada’s biggest city, reaching as far as distant municipalities like Waterloo and Guelph. The Toronto Real Estate Board shared that April netted a 16.2% increase in average home prizes in the metro area compared to the same month last year. In April 2015, the average going price for a detached home is just a little over $1,000,000, now, it is at $1,257,958 with no signs of going down anytime soon.
Altus Group vice-president and chief economist Peter Norman share that he does not believe the government should do anything to minimize the demand in major real estate hot markets, rather, the government should focus on reducing the barriers to building so more housing supply can become available.
Norman further shares that foreign investments are not to blame for the price increases, rather they stimulate the supply of high-rise construction. He also says that Toronto is past the planning process for some low-rise supply and that these developments are in the works.
No Cooling Off
Meanwhile, the government has tried various measures in an attempt to cool down the smoldering Toronto and Vancouver real estate markets. The most recent one is the increase in required downpayment for homes that cost more than half a million.
Bank of Montreal chief economist Douglas Porter says that perhaps it is now safe to say that measures introduced to cool off the Toronto and Vancouver markets plus surrounding areas did not really work, especially view of the strong price and demand growth for homes in both cities.
Liberals shared that they have no immediate plans to further tighten the existing regulations and the same sentiment is shared by the Bank of Canada. Both think that trying to curtail the real estate markets by raising the interest rates will do little to benefit the overall economy.
Porter, however, thinks that provincial governments in Ontario and B.C. should step in and do something, such as rehashing their current land use policy. Restrictive land use policy is believed by some, such as Bryan Tuckey of the Building Industry and Land Association to be one of the major factors for driving up prices in both new and old low-rise homes.
It is to be noted that as baby boomers continue to live longer, it seems that those dreaming of low-rise homes can just keep on dreaming until more land becomes available for building low-rise dwellings.
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