Ontario markets gathering steam in house price gains
October 14, 2016
Vancouver area markets continue to dominate those with surging house price gains, but some in Ontario – that aren’t Toronto – are also gathering steam.
Based on the latest Royal LePage House Price Survey for the third quarter of 2016, BC markets dominate the top five. The usual suspects of Vancouver, West Vancouver and North Vancouver are right up there, but Richmond and Coquitlam are also showing strong double-digit increases of 34.3 and 26.4 per cent, respectively, year-over-year.
And in Ontario, Toronto is still posting strong gains, but Oshawa, at 26 per cent, and Richmond Hill, at 25.7 per cent, are far outpacing Toronto’s 12.1-per-cent growth.
"It is likely that properties across the Greater Toronto Area will continue to appreciate throughout the remainder of 2016 and into the spring of 2017," Phil Soper, president and chief executive officer, Royal LePage, told YPNextHome. "Significant levels of demand stemming from the region’s station as one Canada’s great economic hubs will continue to place downward pressure on already low inventory levels, causing prices to maintain their current pace for quite some time."
BC’s new 15-per-cent property transfer surtax on foreign nationals and foreign-controlled corporations, introduced early in the quarter, is causing sales to slow, but is having little impact on Greater Vancouver home prices, which led the country with 30.6 per cent appreciation year-over-year. Ontario, which is said to be considering a similar tax, saw house price increases in the GTA of 13.6 per cent.
Overall for Canada, the Royal LePage National House Price Composite shows that the price of a home increased 12 per cent year-over-year to $545,414 in the third quarter of 2016. The price of a two-storey home rose 13.7 per cent to $649,635, bungalows increased 11 per cent to $459,481, and condominiums 5.8 per cent to $360,679.
“In what may be a final hurrah for this expansionary cycle, Greater Vancouver posted another quarter of unsustainably high price appreciation,” says Soper. “The median value of homes in the tiny West Vancouver suburb increased by nearly 40 per cent – or an astonishing million dollars – year-over-year. That said, relief appears to be on the way. For months, the number of homes trading hands has been slowing on eroding affordability. And, slower sales volumes lead to moderating prices.
"It is unlikely that we will see negative price declines within the region. Vancouver is still one of the world’s most desirable cities to live in, and it will continue to be more expensive than anywhere else in Canada, as a result."
Nationally, real estate markets remain healthy, with home values showing modest to strong price appreciation in almost every Canadian city.
“Even in the hardest hit oil patch regions, prices have held up well, with small single-digit declines, year-over-year,” says Soper.
New measures introduced by the federal finance ministry on Oct. 3, designed to cool the housing market primarily by curtailing foreign buying activity, have led to a decline in sales in Vancouver.
“Consumer confidence suffered a direct hit when the federal government introduced new, more restrictive regulations in early October,” says Soper. “While it is too early to say definitively, it appears Canadian homebuyers are adjusting quickly, and that fears of a hard correction were unwarranted. While the changes are significant, major lenders may already be using similar criteria when writing mortgages in sensitive regions like Alberta and BC, so the additional drag on the market resulting from the new legislation won’t be as great as it appears on the surface.”
Vancouver continues to attract foreign interest, he says, and capital is not expected to automatically migrate to Toronto as a result of the new tax in BC.
“It is important to remember that most people buy houses for the location, lifestyle and family needs, and not simply upon financial investment criteria.”
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About Wayne Karl
Wayne Karl is an award-winning writer and editor with experience in real estate and business. Wayne explores the basics – such as economic fundamentals – you need to examine when buying property. wayne.karl@nexthome.ca