Real house prices in Canada have risen drastically over the last few years. Much of that drastic rise has been experienced in Vancouver and the Greater Toronto Area. Actually, every year these two regions have been posting double-digit gains.
With that said, Canada is not the only country experiencing this meteoric rise of home prices. Knight Frank, a global estate agent and property consultancy, presented its global cities report in 2016 and the findings were overwhelming. Check out some of the renowned global cities where home prices grew the most, and their respective percentages over that same period.
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- 16.9% – Auckland, New Zealand – Real house prices in Auckland (New Zealand’s largest city) have risen drastically, thanks to the many Chinese investors raiding the market. An unending shortage of housing is also to blame to some extent.
- 17.3% – Vancouver, Canada – Property prices in Vancouver have also been pushed higher by the massive amount of investments, especially from the Far East.
- 17.4% – Stockholm, Sweden – This is another global city experiencing a massive housing bubble. It has been driven by incredibly low-interest rates and an overall imbalance in demand and supply in the capital.
- 17.6% – Beijing, China – China’s capital, Beijing, is a rising economic powerhouse; and as its development goes on, real house prices also follow suit.
- In the United States., favorable mortgage rates result in the affordability of houses; however, the main reason for the rising prices is a low supply of homes available for sale.
- Cities in Australia, Britain, and Israel have also seen foreign capital flows affect their house prices, making affordability even more stretched.
The IMF usually monitors and presents its findings on various housing markets around the globe. The economies according to the IMF quarterly Global Housing watch are divided into the following categories.
- The first category—gloom—comprises of 18 economies that house prices reduced significantly during the famous global financial crisis and have settled on a downward path ever since.
- The second category—bust and boom—comprise of 18 economies that seen their house prices recover since 2013 after declining heavily during 2007-12.
- The third and last category—boom—consists of 21 economies that the fall in house prices in 2007–12 was fairly visible and was followed by an immediate rebound.
IMF has been insisting on macro-prudential measures, combined with other measures to improve supply in various countries, including Canada, Australia, and other European countries. Predictably, Canada finds itself among the “boom” category and is always on the IMF’s watch especially as prices continue to rise.
What do all these percentages and figures mean at the end of the day? Simple; the housing market and its rising prices are brought about by a number of factors and to isolate one of those factors might not present a full-proof “way out” to help bring house prices under control. A combination of the right strategies and natural economic forces in the long run maybe the only approach to decelerate the housing market in Canada, and other counties as well. And notably, that will entail zeroing in on more than just a few foreign buyers.