Real Estate In Toronto And Vancouver: Both On Different Paths

A recent study put forward that the housing markets in Canada seem to be operating differently on their own. Vancouver’s market seems to be calming down while Toronto is looking for ways to keep its momentum. According to TD Bank, Vancouver has already begun the modest correction that was long since anticipated, that will be reinforced by the latest enactment of the land transfer tax on foreigners. TD said: “Home prices are projected to decline by about 10 per cent in the region by mid-2017, before stabilizing later in the year.” Despite the decrease, the bank said that the prices will be way above the previous price for the past one to two years.

TD said: “Home prices are projected to decline by about 10 per cent in the region by mid-2017, before stabilizing later in the year.” Despite the decrease, the bank said that the prices will be way above the previous price for the past one to two years.

The B.C government imposed a 15 percent property tax on foreign buyers in order to deal with the issue of housing affordability in Metro Vancouver. On a different note, Toronto will continue to show vigor as the TD report foresees. The report said: “Toronto has more room to accelerate over the near term. Barring the levying of a similar tax, foreign investors could switch focus to the more affordable Toronto market,” TD said. Nationally, the bank said it continues “to bet on a sustained soft landing in both markets — and in Canada by extension — over the next two to three years.” “To the extent that bond yields fail to track higher, policy-makers may need to consider other alternatives to rein in the Canadian housing market.”

The report said: “Toronto has more room to accelerate over the near term. Barring the levying of a similar tax, foreign investors could switch focus to the more affordable Toronto market,” TD said. Nationally, the bank said it continues “to bet on a sustained soft landing in both markets — and in Canada by extension — over the next two to three years.” “To the extent that bond yields fail to track higher, policy-makers may need to consider other alternatives to rein in the Canadian housing market.”

“To the extent that bond yields fail to track higher, policy-makers may need to consider other alternatives to rein in the Canadian housing market.”

During the same time that the report arrived, the Royal Bank also mentioned that the first six months of this year was recorded to be the biggest drop in the affordability of houses in Vancouver for a consecutive six months since the 1990s. The cost-of-ownership measure was reported to increase to 90.3 percent of the average family income before tax in Vancouver after it rose to 6.1 percentage points during the second quarter and 6.6 percentage points for the first quarter.

In over 26 records as recorded, this was the main back-to-back fall back in housing affordability for the Vancouver region. RBC calculates how much will be needed from an average family’s pre-tax income to be able to pay for monthly mortgage interest and principal payments, including property taxes and services for two classes of housing across the 14 urban markets in the country.

The total numbers in Vancouver were lopsided because of the increasing costs for single-family detached homes, while the cost of condos went up modestly during the second quarter unlike the first. During the quarter, Toronto has the second-biggest fall back in the affordability of housing in the country, with the home-ownership index cost going up by 2.1 percentage points to 60.2 percent of an average income before tax.

For the other big cities, they were lucky enough to only go through a modest decline in the affordability of homes in the second quarter, while other cities of Calgary, N.B, Saint John and St. John’s, N.L kicked the trend with the cost of ownership lowered.

To sum it up, the cost of ownership in the country amounted 42.8 percent of an average household pre-tax income in the second quarter, increased by 1.2 percentage point from the earlier quarter and for since the second quarter of last year, at 2.9 percentage points.