Photo: James Bombales
What do Toronto and Hamilton have in common with Reykjavik, Hong Kong and Kochi, India? Each city saw home prices rise by over 20 per cent in the second quarter of 2017, according to Knight Frank’s Global Residential Cities Index, enough to place them among the world’s hottest real estate markets.
And, for the first time, Toronto led the 150 city ranking released quarterly by the UK-based real estate consultancy. Hamilton, which entered the top 10 last quarter, ranked at number three, behind Toronto and the major Indian port city, Kochi.
Toronto’s 29.3 per cent 12-month index price increase was enough to earn the city the top slot. The three Chinese cities that had ranked above Toronto in the first quarter index — Wuxi, Nanjing and Zhengzhou — saw price growth decelerate, though two of the three cities remained in the top 10 with growth above 20 per cent.
But Toronto’s days at the top of the list may already be numbered.
“Following the introduction of a new tax on foreign buyers in April of this year, Toronto may follow Vancouver’s path and see price growth moderate in the coming months,” writes Kate Everett-Allen, Knight Frank’s head of international residential research. “Our index covers the period to June 2017 but the latest data from the Bank of Canada shows Toronto registered a decline in prices in August – the first since January 2016.
Indeed, more recent data from the Toronto Real Estate Board (TREB) indicates home price growth in the city has tapered off in the wake of the Ontario government’s Fair Housing Plan — of which the foreign-buyer tax is a part — introduced in April to cool the market. While TREB’s Home Price Index still rose 12.2 per cent year-over-year in September, it’s a far cry from the 31.3 per cent increase observed in April of this year.
Housing Market News Alerts
Sign up for news alerts on the Toronto housing market
In a note published yesterday, RBC economist Robert Hogue predicted that Toronto would experience a period of “flat of minimally rising activity and prices.”
Meantime, Knight Frank’s global urban house price index recorded slower growth at the end of June. It was the first time the index declined since the beginning of 2016.
“The number of cities registering annual price growth above 20% has fallen from 12 to nine in the last three months, with Chinese cities less dominant at the top of the rankings,” Everett-Allen writes in the report.
Knight Frank uses data from central banks or national statistics offices to create its index. For Canadian markets, Knight Frank used results from the monthly Teranet-National Bank House Price Index.