House prices have long been a hot topic in Canada and the major markets, Toronto and Vancouver. The cost of buying a home has risen steadily since 2005, almost year-on-year, with a few exceptions. In 2023, the Canadian composite price index experienced a slight increase, after a
. Despite the correction, the index shows a three-fold increase in homeownership costs between 2005 (the index base year) and 2023. Soaring prices suggest more profits for investors, but they also mean that housing is often out of reach for home buyers. Between 2015 and the fourth quarter of 2023,
by 39 percent. This rapid increase has earned Toronto a spot as
.
A closer look at the residential markets in Ontario and British Columbia
About 67 percent of Canadians
live in owner-occupied homes in Canada, but it is safe to assume this share is lower in the country’s largest cities. Property prices in these cities are
some of the highest in the country - also reflected in the rental market. As of January 2024,
the average monthly rent for a two-bedroom apartment in Toronto, ON, was 3,345 Canadian dollars – the second highest in Canada after Vancouver, BC. On average, buying a condo in Toronto Central cost home buyers 680,000 Canadian dollars in 2023, but
some areas exhibited prices as high as 2.7 million Canadian dollars. In January 2024, the Canadian Real Estate Association forecast that the house prices in
Ontario are expected to fall slightly in 2024, while in British Columbia,
they are expected to increase. As housing transactions
pick up in the next two years, home prices in the country are expected to resume their growth trajectory.
“Fixing” the housing market
Housing affordability has been an issue for many years, but it
has worsened even more since 2020. In 2023, the monthly single-family mortgage payment amounted to approximately 66 percent of a household's income, up from 46 percent in 2020. To qualify for an average-priced home,
prospective home buyers needed an annual income of between 78,000 and 237,000 Canadian dollars, depending on the city. To improve affordability, the Canadian government has introduced a number of regulations, such as a tax on vacant or underused housing that came into force in early 2022 and an act, prohibiting foreign commercial enterprises and non-Canadian citizens or residents from buying residential property for two years, effective January 2023.
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