Jun 23, 2016
So You Think the Market is Hot in Toronto? Try London, England. (PART 2)
Back on this side of the Atlantic, Vancouver and Toronto continue to be exceptionally hot with reports of 30-40 price increases on an annual basis in the New Westminster, B.C. area, a suburb of Vancouver being reported, including a 9.7% increase in May 2016 alone.
The government and even our bankers are reviewing these markets as "frothy", pressing Ottawa to take action. The Vancouver market is clearly being driven by the foreign market, whereas the Toronto market is being drive by demand and lack of supply with a modest input from the foreign buyers. The mayor of Vancouver is urging the federal government to cool off the area's real estate market. http://tinyurl.com/hkwm2fn; and: http://tinyurl.com/zvmmxu8
Here in Toronto, the Toronto Star and other papers continue to beat the bubble drum. http://tinyurl.com/hrmtnzr "Lack of supply keeps the market hot", "making many wonder whether a bubble is inflating". There is no question that house prices, particularly on the low-rise side have escalated dramatically with Toronto house prices increasing $64,000 to $782,000 in the same time period last year but here, the affordability crisis has been largely triggered by government policy on restricting land development and expanding the Greenbelt. In the face of this restriction on supply, the government recently announced new legislation to expand the Greenbelt even further and intensify built-up areas even more, as well as affordable housing legislation for municipalities to implement. It is interesting on the one hand the government wants to restrict "sprawl", and on the other hand, wants to make houses affordable by proposing legislation including a rezoning that would allow municipalities to enact affordable zoning requirements similar to those in England. The 2 policies create results diametrically opposed to each other and in the end, will result in further price increases for the average home owner who is not at an income level to qualify for "affordable housing" by reducing the supply and making the limited supply that exists, even more expensive to cover the cost of "affordable housing".
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