“Though rising the fastest since 1989, the current rate of increase pales against the frothy 30%- plus rates of the late 1980s, when speculators ran amok,” Sal Guatieri, senior economist with the Bank of Montreal, wrote in his latest research note, released Friday. “Today, there is a laundry list of factors driving Toronto’s house prices, with speculation probably near the bottom.
“However, if resale prices continue galloping at a 17% clip, and foreign investors shy away from Vancouver’s market because of the new property transfer tax, speculation could easily take root.”
Toronto’s new home prices are on the swiftest trajectory course in the country, at a current clip of 7% year-over-year, according to BMO.
That’s the fastest pace since June 2004.
It isn’t quite time to panic, according to Guatieri. Though policymakers, economists, and industry players will likely be keeping a close eye on the upcoming data releases.
“The price data in coming months should be eyed closely for signs of further acceleration,” Guatieri wrote. “That would spell T-R-O-U-B-L-E.”
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Source: BMO Economics
Toronto’s new home prices are currently outpacing Vancouver but don’t pin that on speculative investing, according to one leading economist.