Records broken anew in Vancouver and Toronto

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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.
  • Jennifer Coy on 2016-05-09 1:30:44 PM

    Federal Government changes to increase down payment on homes over $500,000...what did they think that would do? Foreign investors don't require mortgages in Canada to acquire property. They are writing a cheque. All that change did was make it harder for residents to buy single-family homes and appropriate space for their families. While I think encouraging supply would be a help to a market where the average Canadian is pushed into renting, facilitating wealth for the ones who had it to begin with, I do not think that foreign investors should be able to use housing like a commodity. Like frozen orange juice or wheat. More supply means more options for foreign investors, too. Ever seen a Vancouver area high-rise at night? It's sad and frightening how many are not lit up. What happens if one day, they all pull out at the same time because another foreign market will improve their return on investment? Flood our market with homes while radically decreasing the value? What of all the people who scraped by to buy one in an attempt to build some equity and security for themselves and their family? It is easy to dismiss the idea that the foreign investment we have should be discouraged or regulated when you benefit financially from it. But nobody is truly immune. I feel the issue needs to be curbed at both the Provincial and the Federal levels by heavily taxing vacancy and non-residents.

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