Photo: Viaggiatore Fantasma/Flickr
If you thought the $538,881 price tag for an average Toronto home was steep, consider this: Central 1, the trade association for credit unions in Ontario and British Columbia, believes house prices in the big city will double over the next 25 years, thanks to a rising population and land supply restrictions (Tweet this).
In the association’s housing market prediction for Ontario, Helmut Pastrick, Chief Economist for Central 1, said that fears of a housing bubble and a price collapse are misplaced.
“Housing in Toronto is expensive but not overvalued, especially from a long-term perspective,” said Pastrick in the news release. “Housing affordability will worsen with the price-to-income ratio rising in coming years.”
The market interpretation runs counter to the Deutsche Bank’s belief that the Canadian market is the most overvalued in the world.
The average price of MLS residential sales in Toronto is forecast to rise at four to five per cent annually through 2016. Though higher mortgage rates in the next three years will but a damper housing sales, Pastrick doesn’t believe it will result in a correction. The capital of Ontario is also expected to lead sales growth throughout the province in through 2016.
When it comes to condos, the Toronto market is expected to slow in light of weaker demand.The total number of new condos in Toronto in pre-construction, under construction, occupancy and sell-out phases will be about 100,000 units at the end of 2013. Capital 1 believes that an inventory correction is currently underway so that new apartments will rise by only 2.2 per cent in 2014. However, condo construction starts are expected to grow in 2015 and 2016.
Elsewhere in Ontario, sales are also expected to rise in the Northeast, Windsor-Sarnia and Stratford-Bruce regions. Sales will remain near 2013 levels in the Ottawa, London and the Northwest regions. Kingston-Pembroke, Hamilton-Niagara, Muskoka-Kawarthas and Kitchener-Waterloo regions could see a slowdown.
Ontario’s overall rental apartment vacancy will remain at 2.6 per cent through 2014, before declining to less than two per cent in 2016.