Y9825 condos. Houses in the suburbs are becoming more and more difficult to afford. Despite the COVID-19 epidemic, domestic property prices continued to rise last year. Analysts point out that affordable housing is no longer just a problem in big cities. It is also believed that national property prices will continue to rise this year.
The number of home transactions in December 2020 was 47% higher than in December 2019, the biggest year-on-year increase in 11 years, according to data released by the Canadian Real Estate Association (CREA) on Friday. At the same time, the benchmark price of housing has risen by 13%.
The last time there was a similar property boom in Canada was in 2016, which set a record for home sales within a year, with benchmark prices rising more than 15 per cent year-on-year in early 2017.
This time, however, faster property appreciation is not in Canada’s two most expensive markets, Vancouver and Toronto, but in areas that were once affordable.
John Pasalis, president of Realosophy, a real estate brokerage, points out that in the suburbs of Durham and Horton, prices of detached, twin and city houses have risen by about 20 per cent year-on-year. For example, the average price of independent houses in Durham increased by 24% from 641000 yuan in November 2019 to 795000 yuan in 2020.
The epidemic has accelerated the influx of urban residents to the suburbs in search of bigger and cheaper houses. Statistics Canada figures show that between early July 2019 and early July 2020, 50375 more people flocked to other parts of Ontario than moved back into Toronto. Montreal also has a net loss of 24880 people. The overall population growth in the two cities is mainly due to immigrants from outside Canada.
In Montreal, the recent property boom has also pushed up house prices, which have so far been relatively affordable. In the eastern part of the city, for example, bungalow prices are up 19% from last year, says Georges Gaucher, a real estate agent at Royal LePage.
Buyers looking for lower prices have also flocked to ocean provinces, putting upward pressure on local prices. In Halifax, for example, there was a net inflow of 1584 people from other provinces in the year to July 2020. These figures do not yet show the influx of people in the second half of 2020, which could lead to double-digit house price growth. The price of a typical bungalow in the city is now 335744 yuan, up more than 19 percent from the last quarter of 2019, according to a report released by Royal Real Estate on Friday.
This trend has raised concerns about the rapid deterioration of housing affordability. Mr Passaris says that when house prices rise at an annual rate of more than 20 per cent, they quickly erode any pre-existing affordability. He believes that a similar “bubble” has been seen on the outskirts of Toronto.
However, not everyone thinks that soaring house prices is a bubble. In Montreal, Goetzel refuted the idea that he decided to buy a house for fear of missing an opportunity or “missed phobia” (FOMO). He believes that the current housing demand is driven by buyers who are interested in leaving downtown apartments in pursuit of larger houses and green space, and because the epidemic limits spending on vacations, entertainment, clothing and other expenses. Helped Canadians save money. He thinks this is the biggest difference from the market in 2016-2017, when real estate investors flocked to the hottest markets.