Foreign demand for real estate shifting from Vancouver to Toronto
VANCOUVER (NEWS 1130) – TD Bank is forecasting two different futures for the Vancouver and Toronto real estate markets: prices are expected to slip in Vancouver while they continue to climb in Canada’s largest city.
The TD report predicts a 10 per cent correction over the next year, but that would still leave prices much higher than they were a couple of years ago.
TD Bank economist Diana Petramala says “Vancouver has embarked on what is expected to be a modest correction that will be reinforced by the recent implementation of the land transfer tax on non-residents.”
UBC Housing economist Tom Davidoff agrees the 15 per cent tax on foreign buyers recently brought in by the provincial government is one factor pushing Vancouver prices down. “I think it’s hard for anybody to believe that the tax has been a positive for the Vancouver market in terms of price pressure. It almost surely has been a negative, but exactly how negative’s tough to get a read on.”
Bank economists expect some foreign demand may shift to Toronto, unless the Ontario looks at a similar tax.
Davidoff says another difference between the two markets can be seen when you look at the current average home price in both places. Vancouver prices are already extremely high, while Toronto still has room to grow.
Lastly, Davidoff says Toronto’s increase seems more tied to market fundamentals. “Toronto is a terrific labour market, so even if foreign demand were to go away, those prices are maybe sustainable by rents and incomes.”
TD doesn’t see the climb continuing in Toronto forever. It is forecasting a soft landing for both real estate markets over the next few years.