According to the latest official figures, benchmark prices in Vancouver shot up by 23.2 per cent on a year-over-year basis last month, while Toronto prices saw an 11.6 per cent increase in the same period.
In a client note issued on April 6, BMO senior economist Robert Kravic outlined the most commonly cited risk factors to Canada’s bustling home sector, and when they might materialize:
“The concern is that rising prices don’t slow activity, but rather beget even higher prices. The Vancouver condo market might be heading down this road now,” Kravic said, as quoted by BNN News
As of February, a Vancouver household would need the equivalent of 109 per cent of its total income to afford its home, while a Toronto-based family would have to allot 71 per cent.
“Condo supply is coming to market in these cities, but detached supply, as we’ve argued for years now, is drum tight and not changing.”
The Canadian Real Estate Association found that Vancouver and Toronto remain sellers’ markets, with the latter in particular seeing its highest sales-to-new-listings ratio since the 2008-09 recession, at approximately 70 per cent.
On greater interest rates:
“Umm, no,” Kravic said, pointing at the Bank of Canada’s decision in March to maintain its benchmark interest rate, after two rounds of rate cuts last year.
On policy measures:
“That’s a no, at least not the variety (i.e., marginal changes to down payment requirements) most recently introduced by Ottawa.”
On higher unemployment/weaker economy:
“Not likely anytime soon,” Kravic wrote, adding that prospects for B.C. and Ontario—which currently lead the rest of the country in terms of growth—remain bright.
Canada’s hottest real estate markets have set new records in March, and a Bank of Montreal report said that this upward momentum won’t be stopping any time soon.