What’s Driving up Real Estate Prices in Toronto?

Home prices in the GTA have continued to soar, with the average selling price hitting $1,108,453 in May, a 28.4% increase from $863,563 in 2020 (TRREB).

Here is a breakdown of prices in Toronto:

• Detached: A 37% y-o-y increase to $1,415,698
• Semi-detached: A 22.6% y-o-y increase to $1,064,361
• Townhouse: A 26.2% y-o-y increase to $866,349
• Condo: A 9.1% y-o-y increase to $682,280

A new report by URI and FCPP on housing affordability ranked Toronto among the five most expensive cities in the world, along with Vancouver.

For the housing market in a city to be deemed severely unaffordable, the price-to-income ratio must be 5.1 or more. Toronto score 9.9 preceded only by Hong Kong (20.7), Vancouver (13.0), Sydney (11.8), and Auckland (10).

Here are some factors experts believe are driving up house prices in Canada’s largest city:

• Taxes and development charges
• Foreign buyers
• Low-interest rates.

Land transfer taxes and fees add $54K to every detached home sold in Toronto, also some development charges increased 787% since 2004, adding ~164K to a new-built condo.

2017 figures from CMA revealed that about $37.4B worth of properties in Toronto is owned by foreign buyers, which contributes to unaffordable housing prices for many Canadians.

the low interest rate makes mortgages more attractive, propelling buyers into the market and increasing competition in an uncertain time.