As reported by HuffPost Business Canada
, analysis of price growth trends shows that the overheated Vancouver and Toronto markets are responsible for keeping the average prices of Canadian housing at historically high levels.
“[Price growth is] very close to the top of its range of recent years,” National Bank
Financial economists Matthieu Arseneau and Kyle Dahms wrote in a report released last week. “And this at a time of record-low interest rates.”
On average, a household in Vancouver would need nearly 107 months of savings to fully service down payment requirements, while Toronto homes need around 70 months.
In contrast, Montreal has exhibited the best home affordability levels in a decade, and prices in Calgary, Edmonton, and Ottawa-Gatineau are the lowest they’ve ever been.
Recent regulatory changes in the mortgage industry—which now require would-be buyers to put a 10 per cent down payment on any home priced above $500,000—have done little to cool down Vancouver and Toronto, where most properties are valued below the half-million-dollar threshold.
While the Canadian real estate sector has been repeatedly proclaimed as one of the most attractive in the world, the country’s attractiveness for investors masks a disturbing development: Most of the growth is supported by activity in the cities with the highest demand, leaving other locations far behind.