It’s a tale of two cities: prices in Vancouver are on the way down as Toronto prices zoom ahead.
The latest numbers
Teranet figures and National Bank of Canada House Price Index both measure price changes in single family homes. Thursday figures showed Toronto home prices rising to a record high of 19.7 percent in December, compared to the previous year.
Vancouver home pricing increased by 17 percent over the previous year, but monthly price change trends are lower. The main reason for the dip in home pricing is likely due to the new Vancouver tax regulation on home sales to foreigners.
Vancouver’s December prices dipped 0.8 percent compared to November. This marks the third time that prices slipped below the 2.8 percent price rise recorded the year before.
In Toronto, house prices rose 1.2 percent between November and December. This marks the eleventh time that home prices increased in Toronto last year.
Why Vancouver is falling
A top official of National Bank notes that the national home price inflation slowed down because of Vancouver. Vancouver is still home to the nation’s costliest properties. This January marks the third consecutive month that prices fell in Vancouver below the previous year’s numbers. The trend of a deflating Vancouver property market is likely to hold for some more time.
In Vancouver, properties other than condos have shown the most dip in prices. Trending price declines have taken hold ever since prices of single family homes peaked in February.
Monthly pricing variation in major cities across the nation
|City||Monthly rise in property price
|Monthly dip in property price
|Quebec City, Calgary||0.6|
|Hamilton and Halifax||0.4|
Annual pricing variation in major cities across the nation
|City||Annual rise in sales
|Annual dip in sales
Will homes become more affordable?
Prominent economists predict that despite the steady increase, Toronto prices are bound to fall. However, changes in federal tax regulations and mortgage rules may ease prices instead of triggering bigger deviations. Home prices may become less affordable following changes in eligibility requirements for government-insured mortgages. These changes will deflate property prices and lower demand as homes become costlier.
Toronto, Victoria, and Hamilton are the three major metropolitan zones showing price growth. In all other zones, the previous six month’s prices remained unchanged. The only exception is Vancouver where prices are decreasing.
According to national statistics, property prices increased by 0.3 percent between November and December. Prices grew 12.3 percent in December 2016 compared to 2015 numbers.
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