In the latest edition of its Housing Trends and Affordability Report, RBC Economics Research noted that homes in Canada are reasonably priced—provided that the buyer does not intend to reside in Toronto or Vancouver.
“The significant rise in homeownership costs in Vancouver and Toronto had a dominant influence on Canada-wide affordability measures in the fourth quarter of 2015,” RBC chief economist Craig Wright stated in the report, as quoted by HuffPost Business Canada.
The untrammelled price growth in the two cities has caused the overall affordability index nationwide to decline in the last few months of 2015, with RBC figures pointing at the drastically different price points across various regions.
The Canadian Real Estate Association corroborated the findings, stating that the national average sale price saw a 17 per cent upward spike in January compared to the same month last year. Not taking into account Ontario and British Columbia, this same metric actually shrunk by 0.3 per cent over the same period.
Updated numbers indicate that the market might be starting to feel the effects of these unchecked increases, with new home sales in Toronto going down by 22 per cent in January 2016 compared to last year, and 10 per cent compared to the long-term average.
However, officials from the Building Industry and Land Development Association (BILD) advised market players to not act hastily on this information.
“It is important to understand that one month does not a trend make. The next few months will tell a more accurate story about the market with the introduction of additional new projects across the GTA,” BILD president Bryan Tuckey said.
While Canada’s economy has shown signs of gradually bouncing back over the past few quarters, housing prices in the hottest markets are increasing at a rate that far outpaces the recovery, according to a recent analysis.