Photo: James Bombales
Canada once dominated global housing price growth, but it seems that time has come and gone.
After occupying top spots on Knight Frank’s global house price index for years, Canadian cities fell to the bottom of the list last quarter. While Toronto held top spot in Q1 2017, it found itself falling to 137th place in Q2 2018. Similarly, Hamilton slipped from third place to 128th.
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The one notable exception? Vancouver, which sat in 52nd place in Q1 2017, now sits in 10th place, with a Q2 2018 price increase of 13.3 percent. The city had seen strong price growth for months, as record levels of demand meet a low level of housing supply.
“Tax stamp duty (Vancouver, Toronto, Hong Kong) has led to slower growth at the luxury end of the market,” reads the Knight Frank report.
That’s referring to foreign buyer taxes applied to both cities over the past two years, which caused home prices to take a serious plunge after months of bubble-like conditions.
Toronto prices saw a decline of 2.8 percent year-over-year, according to Knight Frank, a far cry from Q1 2017’s 29 percent increase.
It remains to be seen how rising interest rates affected markets in the third quarter of the year. The Bank of Canada hiked the overnight rate to 1.50 percent in July, and is widely expected to so again later this month, in a move that will drive up mortgage rates and could push down home sales and prices.
“Of those countries where a rate rise has taken place in 2018, a number have a significant gap between their strongest and weakest performing city (16 percent in Canada,)” reads the report.
The ranking echoes the findings of a recent report from Moody’s Analytics and RPS Real Property Solutions, which predicted slower price growth over the next five years.
“The national housing market still has a long way to go before it regains the level of affordability it had before 2015, when prices in Toronto and Vancouver took off, but has now taken the first steps to do so,” wrote Moody’s economist Andrew Carbacho-Burgos, in the report.