Hamilton, Ontario, has been witnessing massive home price gains catapulting it into the top 10 on a list of 150 global markets. Photo: Doug Kerr/Flickr
Toronto has once again placed high on an international real estate ranking, but this time around it’s being joined by a nearby Ontario city.
In the first quarter of the year, Toronto home prices rose at the fourth-fastest rate out of 150 markets worldwide, while Hamilton — which has recently been compared to Brooklyn, New York — was close behind in the seventh slot, according to Knight Frank’s Global Residential Cities Index.
Toronto prices were up an impressive 24.8 per cent at the end of March from the same month the year before, while Hamilton prices appreciated by a sizzling 21.5 per cent over the same period.
The average for the 150 markets Knight Frank tracked was up 6.9 per cent annually at the end of this year’s first quarter. Eighty-two per cent of markets saw prices up from the same time last year, Knight Frank states.
Three Chinese cities topped Toronto’s performance. The list-leading Wuxi posted gains of 31.7 per cent, and Nanjing, and Zhengzhou prices appreciated by 28.8 per cent and 25.4 per cent, respectively.
Moving forward, the UK-based real estate consultancy suggests Toronto’s momentum could ease as a result of Ontario’s Fair Housing Plan, which introduced a foreign-buyer tax for the Greater Golden Horseshoe, including the GTA.
Chart: Knight Frank
“A 15 [per cent] foreign buyer tax introduced in April suggests the city may follow Vancouver’s path further down the rankings later this year,” notes Knight Frank in the report including the index.
BC introduced a similar tax for Metro Vancouver in August last year, and since then Vancouver has posted smaller annual gains, although there are signs a recovery is underway.
Vancouver ranked 30th in the first quarter, with prices rising 12.2 per cent on a year-over-year basis at March’s end.
That’s behind Victoria, BC’s capital, at number 20, where prices surged 18 per cent and a foreign-homebuyer tax does not currently exist.
Knight Frank uses data from central banks or national stats offices to create its index. For Canadian markets, Knight Frank used results from the monthly Teranet-National Bank House Price Index.
Compared to Toronto, Hamilton is a less-expensive market and has been attracting buyers from the GTA who are in search of affordable homes, particularly in the low-rise segment.
But this alone doesn’t account for the Hamilton market’s strength, a Knight Frank researcher says. In fact, it’s not even the biggest influencer of prices.
“Price growth in Hamilton is primarily due to the supply/demand imbalance,” Kate Everett-Allen, Knight Frank’s head of international residential research, tells BuzzBuzzNews.
She also points to a few other factors at play. “Positive macroeconomic fundamentals and record low interest rates have underpinned house price performance across Canada,” she continues.
Contractors completed work on 63,302 new homes in Ontario last year, short of the province’s population increase of 185,906 people during that time, Everett-Allen adds. The imbalance is leading to worsened affordability.
“As supply has failed to keep up with additional demand the rate of growth of house prices for cities within Ontario has increased,” she concludes.