The engines of Canada’s already overheated housing markets do not appear to be halting any time soon, as price growth records have been shattered anew with incredibly strong performances from Vancouver and Toronto.
Last month alone, Vancouver saw a 25.3 per cent year-over-year increase in home prices, while Toronto experienced a similarly sharp 16.2 per cent growth in the same period. The average prices of a detached-type property now stand at $1,817,027 in Vancouver and at $1,257,958 in Toronto.
Experts said that federal measures intended to cool down the housing sector in these locales, including increased down payment requirements for homes valued above half a million dollars, have not worked.
“There has been relatively strong job growth in both Vancouver and Toronto over the past year, and interest rates are lower than a year ago — but enough to explain this strength? No. The risk here is what had been a previously robust market is clearly now in danger of entering speculative-land, which ultimately is good for no one.” Bank of Montreal chief economist Douglas Porter told the Financial Post
Observers have long attempted to pinpoint the actual drivers of the seemingly unstoppable rates of growth, with the increasing amount of foreign investment capital—spurred by generous exchange rates due to the weak loonie—usually cited as a crucial factor.
“Where we do have foreign investment in the GTA and Vancouver, it is driving supply. Most of the discussion is foreigners are buying product and not using it. That’s a small part of the question. Most of the foreign money is financing new construction,” Altus Group vice president and chief economist Peter Norman explained.
Norman argued that calls for federal authorities to restrict market access to overseas investors are misguided, however.
“I don’t think governments should be doing anything to try and curtail demand right now. If anything, government should be trying to reduce the barriers to building, whether it’s land development to encourage more supply to come forward,” he said.