Photo: James Bombales
With home prices on the rise in Toronto and Vancouver, buyers are looking to other Canadian cities where they can get more bang for their buck.
According to the RE/MAX 2018 housing market outlook report, smaller cities in Ontario and BC have seen a surge of demand in the past year.
“Buyers leaving the GTA and Greater Vancouver have contributed to increased demand and considerable year-over-year average price increases in Kelowna (9 per cent), London-St. Thomas (18 per cent), Hamilton-Burlington (15 per cent), Barrie (19 per cent), Niagara (23 per cent), Kingston (8 per cent) and Ottawa (9 per cent),” reads the report.
Housing Market News Alerts
Sign up now for news alerts on the Canadian housing market
According to RE/MAX, much of the boost in activity was fueled by Toronto’s red hot prices during the first four months of the year. Smaller cities may also hold another feature that buyers are looking for: backyards.
“The survey also found that access to outdoor spaces was a key factor for many Canadians when considering a home, with 87 per cent agreeing that access to green space was important to them and 82 per cent agreeing that having a backyard was important,” reads the report.
But RE/MAX doesn’t expect these price gains to continue in the new year.
“Following increased fall market activity in some regions, we anticipate the new mortgage stress test to slow activity across Canada during the first few months of 2018,” writes RE/MAX western Canada regional executive vice president Elton Ash, in a statement.
The stress test is set to come into effect on January 1, and is expected to limit the purchasing power of many first-time buyers. It will require all uninsured mortgage borrowers to qualify against the Bank of Canada’s five-year benchmark rate, or at their contract rate plus an additional 2 per cent.
“Based on conversations with RE/MAX brokers, we anticipate the greatest impact of decreased buyer purchasing power to be in Victoria, Greater Vancouver, Kelowna, North Bay, London-St. Thomas, Barrie, Hamilton-Burlington, the GTA, Durham Region, Kington, Ottawa, Halifax and St.John’s,” writes Ash.
RE/MAX is forecasting that the average sale price of a Canadian home will rise by 2.5 per cent in 2018, as demand remains strong, particularly among Canadian Millennials.