Photo: James Bombales
Just last year, Canada ranked fourth in a widely cited global home price ranking. But after the introduction of a series of policy measures, it’s now fallen all the way to 37th place.
In Q1 2018, Canada ranked 15th in Knight Frank’s quarterly global house price index, which tracks home price inflation in 57 countries. In Q2 2017, amid a surge of housing activity in the GTA market, it held fourth spot.
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The reason for the tumble? Foreign buyer taxes in Toronto and Vancouver, new mortgage rules, and a rising interest rate environment all have a role to play, according to Knight Frank partner Kate Everett-Allen.
“The introduction of macroprudential measures in cities such as Vancouver and Toronto, combined with the rising cost of finance and high household debt ratios is dampening demand and slowing transaction rates in some markets,” Everett-Allen tells Livabl.
Canadian home prices were up 2.9 per cent year-over-year in Q2 2018, a significantly slower pace than Q1 2018’s 6.6 per cent or Q2 2017’s 14.2 per cent growth.
Other countries have also seen their price growth slow over the last quarter. The global index rose 4.7 per cent in Q2, the slowest annual pace since Q3 2016.
“We are seeing the cost of finance increase in a number of key markets globally, albeit at a slow and incremental pace, which is dampening demand to some extent,” explains Everett-Allen. “Affordability concerns and, in some markets, stringent property market regulations, are also leading to weaker transaction volumes.”
But, despite a slower pace of growth, prices are on their way up in the majority of countries tracked by the ranking.
“Prices are rising in 88 per cent of countries tracked, up from 56 per cent four years ago in Q2 2012,” says Everett-Allen. “No country has registered a decline of 10 per cent or more in annual terms since Q4 2016.”