The latest report from BMO Economics pointed at continuous residential property price growth in Canada’s top markets – a development driven by millennials snapping up homes left and right amid the burgeoning economy.
In the “BMO Spring Housing Affordability Report”, experts also pointed at continued high levels of home building and only a moderate deceleration in sales as contributing factors to the trend of price growth.
“Millennial buyers and international migrants are cushioning the decline in detached home prices in the hottest markets,” BMO Capital Markets senior economist Sal Guatieri stated.
“The perennially hot markets of Toronto and Vancouver are largely driven by the impact of millennial home buyers creating price increases in the condo and townhouse markets. These regions are also supported by strong economies, good demographics, and an abundance of high tech/high salary jobs,” according to the BMO report.
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“We expect millennials to also bolster other markets like Montreal and Ottawa, as those looking for better affordability consider options beyond Toronto and Vancouver,” Guatieri added.
Other factors affecting the market on a national scale are unemployment rates being among the lowest on record, coupled with the highest population growth seen in a quarter century.
Interest rates, while still historically low, might experience more hikes in 2018, the report cautioned.
“It is likely we will see interest rates go up another 50 basis points this calendar year,” Guatieri said. “Even these moderate increases will start to erode affordability for markets that haven't been much affected by tougher mortgage rules and other cooling measures.”