Canada’s largest city just keeps getting bigger — at least in terms of what constitutes “Toronto” real estate.
Canada Mortgage and Housing Corp. said Tuesday it is seeing a so-called spillover effect as far away as the St. Catharines-Niagara region after already witnessing the impact in places like Guelph, Hamilton and Barrie.
“Our evidence indicates that increasing single-family home prices in the GTA are motivating buyers to purchase more affordable homes in nearby centres. In turn, this purchasing behaviour is driving up house prices in these markets,” said Jean Sébastien Michel, principal, market analysis with CMHC.
The Canadian Real Estate Association said in January the average price of a home sold Niagara reached $317,861, up 16.1 per cent from a year ago.
The Crown corporation maintains the impact on price has been greatest in Hamilton, where it says there is strong evidence of overvaluation. “The growth in house prices persistently outpaced economic and demographic fundamentals,” according to the report.
According to the Realtors Association of Hamilton-Burlington, the market is entering 2017 with low inventory. The average resale home across the market was $515,001 in December, up 13.7 per cent from a year ago.
CMHC says the price gains in neighbouring municipalities trace back to what is happening in the Greater Toronto Area where the average price of a home climbed 18 per cent in the third quarter of 2016.
Since the recession, the average GTA house price has been increasing at a disproportionately faster rate than any other Ontario area. Since the first quarter of 2016, CMHC says GTA prices are up about 30 per cent more than they should be compared to the rest of the province.
Hamilton, Barrie, Guelph and Kitchener price growth has been linked to the GTA. St. Catharines-Niagara have only had a strong price growth relationship to the GTA since the 2008-2009 period.
“Overall, our evidence indicates that increasing single-family home prices in the GTA are motivating buyers to purchase more affordable homes in nearby (municipalities), driving up prices in those centres,” said CMHC.
But how far will people go to escape those Toronto home prices? “Sudbury and Ottawa prices appear to be affected by GTA apartment prices, possibly because these two (municipalities) are relatively affordable and yet still offer high wage jobs.”
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