Photo: James Bombales
Canadian home prices have been on the rise for years, and according to a new report from the Canada Mortgage and Housing Corporation (CMHC), there’s a clear reason why.
“Large Canadian centres like Toronto and Vancouver are increasingly behaving like world-class cities. Their strong local economies and historically low interest rates make them attractive to both people and industry, which drives up demand for housing,” writes CMHC deputy chief economist Aled ab lorweth, in a statement released today.
Home prices in Vancouver rose an astonishing 48 per cent from 2010 to 2016, while, in Toronto, prices jumped 40 per cent over the same period.
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Accord to ab lorweth, Toronto and Vancouver have been seriously undersupplied over the past six years. This, along with record demand has caused prices to surge.
“When you have weak supply responses, as you do in these markets, prices have nowhere to go but up,” writes ab lorweth. “Alleviating these pressures lies in finding ways to increase supply and that is a shared job for jurisdictions at all levels.”
According to the report, while supply levels have remained low in both Toronto and Vancouver, the condo market has introduced the most units into the pipeline over the last six years.
“Investor demand for condominium apartments has increased,” reads the report.
First-time buyers contending with new mortgage rules and an interest hike are turning to the condo market for more affordable homeownership options.
“Everybody is looking to the most affordable housing types this year,” Zoocasa managing editor Penelope Graham told BuzzBuzzNews. “We’re anticipating that condos are going to have another very strong year, as everyone’s being knocked back a peg in terms of what they can afford.”
It’s a sentiment that’s been backed up by the Toronto Real Estate Board, which predicts strong price growth in the condo market in 2018.
“Strong local economic conditions, including home growth above the rate of inflation, coupled with an increased immigration target will result in sustained household growth in the GTA, both in 2018 and over the long term,” reads a recent report by the board. “Toronto market conditions will remain balanced enough to see support for home prices.”