“We have enough history now to distinguish the clear divergence between Vancouver (down) and Toronto (still straight up),” BMO chief economist Douglas Porter wrote in a January 24 client note, as quoted by BuzzBuzzHome
Porter stated that sufficient time has passed to make a proper evaluation of these leading markets, as it’s been approximately half a year since the B.C. government’s implementation of the 15 per cent foreign home buyer’s tax in its jurisdiction.
BMO noted that after the tax took effect on August 2, Vancouver prices have seen a significant 3.1 per cent retreat by the end of the year. Many of the foreign buyers who have fled that market are now casting their lot with Toronto and Victoria.
“And, in case there was any doubt what force is at place, note that Victoria has tracked closer to Toronto’s behaviour then Vancouver’s,” Porter said, adding that the B.C. tax does not cover the city.
Over the final quarter of 2016, Toronto home prices rose by 3.8 per cent, while Victoria residential prices grew by around 2.5 per cent.
The growing consensus among industry observers is that the two cities are now the main contributors of strength and activity to Canada’s residential real estate sector.
Recent data released by Teranet showed that Toronto—which experienced 20 per cent growth in housing sale prices last year—was one of the only two Canadian markets that posted gains in the second half of 2016, along with Victoria.
Earlier this month, former Victoria Real Estate Board president Mike Nugent said that the province’s home prices might see a healthy upward climb this year as a result of inbound migration from other Canadian provinces.
“There’s more buyer demand than we can supply right now,” Nugent said. “In Victoria, because we’ve got so few places available — all our projects are sold out — and because of the shortage of inventory even though sales will be less, we expect prices to continue to keep inching up.”
Victoria market to benefit from inbound migration - real estate official
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The steady entry of foreign money is chiefly responsible for the continuous growth in Toronto and Victoria residential real estate prices, according to the Bank of Montreal.