Canada’s hottest housing markets in Toronto and Vancouver have been called “dangerously unaffordable” and “pockets of risk,” but National Bank’s chief economist says there’s a good reason for the dizzying surge in home prices.
“Strangely enough, the alarmists fail to mention that the working age population is growing 70 per cent faster than the national average in Vancouver and Toronto on the back of strong inflows of highly educated immigrants who can more easily integrate [into] the job market ,” said Stefane Marion in a research note Tuesday.
More working age Canadians are opting to live in the two priciest real estate markets as labour trends increasingly favour large urban centers. Employment surged 5.5 per cent in Toronto and 4.4 per cent in Vancouver in 2015, while nationwide job growth was 0.9 per cent.
“The underlying force for housing demand is household formation. If your population aged 20 to 44 is growing, you have it. If it’s not, home price inflation is not sustainable,” said Marion.
The benchmark price across all types of homes in Metro Vancouver increased 22 per cent year-over-year in February, according to the Real Estate Board of Greater Vancouver. The average selling price in Toronto jumped nearly 15 per cent last month from a year earlier, according to the Toronto Real Estate Board.
Marion notes the price-to-income ratios for a 90 square meter (about 970 square foot) condo in Canada’s largest cities are a far cry from major cities around the world. Vancouver and Toronto are near 10. San Francisco is closer to 15. London, Beijing, and Hong Kong push the ratio close to 35.
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“Strangely enough, the alarmists fail to mention that the working age population is growing 70 per cent faster than the national average in Vancouver and Toronto on the back of strong inflows of highly educated immigrants who can more easily integrate [into] the job market ,” said Stefane Marion in a research note Tuesday.
More working age Canadians are opting to live in the two priciest real estate markets as labour trends increasingly favour large urban centers. Employment surged 5.5 per cent in Toronto and 4.4 per cent in Vancouver in 2015, while nationwide job growth was 0.9 per cent.
“The underlying force for housing demand is household formation. If your population aged 20 to 44 is growing, you have it. If it’s not, home price inflation is not sustainable,” said Marion.
The benchmark price across all types of homes in Metro Vancouver increased 22 per cent year-over-year in February, according to the Real Estate Board of Greater Vancouver. The average selling price in Toronto jumped nearly 15 per cent last month from a year earlier, according to the Toronto Real Estate Board.
Marion notes the price-to-income ratios for a 90 square meter (about 970 square foot) condo in Canada’s largest cities are a far cry from major cities around the world. Vancouver and Toronto are near 10. San Francisco is closer to 15. London, Beijing, and Hong Kong push the ratio close to 35.
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