By Kate Davis A s theCanadianReal Estate continues to see housing prices grow at an amazing rate, many home buyers are growing increasingly worried about home affordability, particularly in the cities of Toronto and Van- couver where there seems to be no ceiling to the market. However, as bad as it may seem, a recent report from the National Bank Financial, shows that things are not as bad as some other major cities around the world. Economists Matthieu Arseneau and Kyle Dahms pub- lished information showing how Canada’s three largest metro areas compare to 15 major cities in Europe, North America and the Asia-Pacific region. Comparisons made on the chart below show that currently housing is much more affordable in Canada’s major cities than it is cities like; London, Tokyo, Hong Kong, Rome, New York, Paris, Stockholm and Vienna. It must be said that there are some limited factors to these comparisons. One for example is that it only compares downtown condo or flat prices and these are the area of the Toronto and Vancouver housing markets that have seen the greatest increase in prices over the past few years. For example in Beijing or Hong Kong, a flat or condo of approximately 1000 square feet will cost you about 34.7 times the city’s average income. If you compare that to Vancouver, Canada’s least affordable city, that same
condo will cost you 11.3 times average income.
Canadian affordability levels are similar to levels seen in Australia, which has a similar resource-based economy to Canada’s. The Canadian Real Estate Association (CREA) reported Friday that home sales in Canada peaked in April and have fallen for the past two consecutive months. At the same time, new listings are up, suggesting that the market is becoming slightly more favourable to buyers and less favourable to sellers. Still, the amount of housing inventory on the market is at a 6 year low which represents an increasingly tighter housing market in both British Columbia and Ontario. With housing sales over 5 percent higher this June than during the same month a year ago, but “year-over-year increases have been steadily losing momentum since February 2016,” CREA said in a statement. The sales slowdown hasn’t slowed prices, at least for now. The average house price in Canada stood at $503,301 in June, an over 11 percent increase in the past year, with most of that growth concentrated in British Columbia and Ontario.
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SPOTLIGHT ON BUSINESS • AUGUST 2016
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