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<\/a>Photo:\u00a0artemzavarzin<\/a> \/ Adobe Stock<\/em><\/p>\nBetween Canada\u2019s two most expensive cities, Vancouver has always outranked Toronto by a mile when it comes to home prices. Now, new data shows that the two markets are neck-and-neck, reporting the smallest home price gap in more than 30 years.<\/p>\n
A report published by TD Economics<\/a> economist Rishi Sondhi today states that as of December 2021, the price of an average home in Toronto was only four per cent less than the average property in Vancouver.<\/p>\n Ontario\u2019s capital is not only vying for the title as the most expensive city in Canada, but the price gap between Toronto and Vancouver has narrowed to the tightest level since 1991. This underscores a \u201cmulti-year trend\u201d where Toronto\u2019s home price growth has outpaced Vancouver.<\/p>\n Sondhi points to a number of influences that have caused prices in the two major cities to grow closer.<\/p>\n For one, government restrictions in the Greater Vancouver Area have been a \u201cbig factor,\u201d in shrinking the price gap in recent years. The imposition of a 15 per cent foreign buyers tax in the GVA during August 2016, which coincided with \u201crunaway strength,\u201d in the Greater Toronto Area market, led to a \u201ctemporary price convergence\u201d in both markets during 2016 and 2017.<\/p>\n A year later, GVA home prices took another hit thanks to more affordable housing policies, such as a hike to the foreign buyers tax and increases to land transfer and school rates on expensive homes. Meanwhile, Sondhi notes that there was a lighter touch to restrictions in the GTA.<\/p>\n As a result, the GTA has seen home prices rise 40 per cent since the end of 2018, while the GVA has reported only a 13 per cent gain on property values during the same timeline.<\/p>\n\n \u201cThese policy measures have generally targeted the higher-end of the GVA housing market, likely impeding sales growth in higher-valued homes,\u201d explained Sondhi in the report. \u201cThis, in turn, would have weighed on average home prices, given the shifting composition towards sales of more moderately priced dwellings.\u201d<\/p>\n Sondhi also pointed out that the sale of homes valued at $2 million or more in the GVA dropped 10 per cent in 2019 before increasing in 2020 and 2021. Although data gaps prevent \u201ca true comparison,\u201d between the GVA and GTA, the sales of GTA homes valued over $1 million have jumped 200 per cent since the end of 2018, which is more than 120 per cent recorded for the same home category in the GVA.<\/p>\n Heading into 2019, policy measures also left the GVA housing markets \u201cextremely oversupplied,\u201d relative to demand, Sondhi said.<\/p>\n \u201cMarkets have generally remained comparatively loose in the GVA since then, muting home price growth,\u201d said Sondhi. \u201cThis gap has recently narrowed however, as GVA sales have outperformed. Both markets have benefitted from robust pandemic demand, but Vancouver has also been boosted by recovery from the restriction-driven slowdown in 2018.\u201d<\/p>\nPolicy measures helped GTA home prices catch up<\/h3>\n
Supply growth, new listings, impacting price growth<\/h3>\n