Resicom – Holiday Investment – 04-21 – LB

Condominiums Soaring in Canadian Major Cities

The price of condominiums in Canadian major cities have far outstripped house prices during 2017.

According to the latest data released by realty company RE/MAX condominium prices in Toronto have risen by 22 per cent, compared to a much more modest rise of 8 per cent for detached properties in the Greater Toronto area.

A similar scenario has been seen in Vancouver, where condominium prices have risen by 16 per cent over the past year, while prices for detached properties have remained relatively stable.

The main reasons seen for the disparity in property price growth are twofold.

Firstly, simply the fact that condominiums cost far less than detached properties, meaning that for younger families and certainly first-time buyers, detached houses are simply not affordable.

Secondly, overseas property investors tend to be attracted to centrally located condominiums in major cities such as Toronto and Vancouver, despite the foreign buyers tax that has been imposed in both of the cities.

According to data from the Canada Housing and Mortgage Corporation, 10 per cent of all condos built in downtown Toronto since 2010 is owned by someone living outside Canada. In Vancouver, 6.6 per cent of condominiums built since 2010 are owned by overseas property investors and foreign nationals.

Executive Vice President at RE/MAX, Christopher Alexander, said: ‘The single-family detached home segment of the market in both the GTA and Greater Vancouver has felt the most significant impact following recent provincial government policy changes.’

Ontario’s rent control policy is also cited as a reason why new build condominiums are attractive. Rent increases are limited to a 10 per cent cap under the rent control policy, but the rules do not limit how much rent can be charged initially. Therefore, with new builds the rent can be set at the highest achievable level.

It seems that overseas property investors have not been put off by the foreign buyers taxes imposed, and whilst RE/MAX predict a modest 2.5 per cent national rise in Canadian property prices during 2018, rival company Royal Le Page have forecast double that in their end-of-year report, expecting prices to rise by 5 per cent nationally, propelled by buyer demand in the Greater Toronto Area.

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