The new government rules relating to housing appear to not have done much to improve the affordability of Canada’s priciest cities so far. In fact, Toronto housing prices have reached the status of “severely unaffordable” from Demographia. How was this determined?
A recent survey found that Toronto has risen in the rankings as one of the most unaffordable cities in Canada despite the foreign buyers tax imposed last year. For least affordable cities around the world, Toronto rose to 21st in the rankings with Vancouver as 3rd place under Sydney, Australia and Hong Kong.
For one thing, the house price to income ratio has risen from 7.7 to 7.9 over the last year. That means that houses cost almost 8 times as much as annual income and this number has increased significantly over just one year.
Furthermore, condo prices in the city are rising rapidly at 14.4% over the year. Fewer people can afford detached homes. Condos are the go-to alternative
Vacant homes are contributing the the issue as well. 2% of homeowners have a second property sitting vacant as an investment which eats into supply.
In order to improve the affordability issue, governments need to develop solutions that work for both residents and real estate developers alike.
Photo Courtesy of Dan Moyle