Housing affordability crisis in Vancouver and Toronto continues unabated: RBC
Vancouver’s housing market is looking more fragile than Toronto a year after policy makers tightened mortgage lending to slow a boom.
While the country’s two most expensive real estate markets have both been hit hard by higher interest rates and tougher mortgage regulations, the data suggest Toronto is faring better and showing signs of stabilizing, while Vancouver continues its slide.
Sales in the west coast city plunged 32 per cent last year, driving benchmark prices down 6.5 per cent over the past six months, according to Canadian Real Estate Association data released Tuesday. Toronto also saw sales fall sharply, but by half as much as Vancouver and with prices in Canada’s biggest city little changed in recent months.
“I’m not worried about Toronto, I’m worried more about Vancouver at this stage,’’ said Sebastien Lavoie, chief economist at Laurentian Bank Securities in Montreal. “The biggest worry I have for Vancouver really is the expectations that could turn a lot more downbeat because of the downward trend we are seeing now.’’
The relative performance reflects in part a bigger surge in prices during the boom in Vancouver, where they gained 68 per cent over the last five years. That’s ahead of Toronto’s 58 per cent increase.
“Vancouver is in full-blown correction mode,’’ Royal Bank of Canada economist Robert Hogue said in a research note Tuesday. “Prices are poised to depreciate more -- potentially a lot more considering the degree to which they are still unaffordable to average buyers.’’
--With assistance from Erik Hertzberg