Canada Mortgage and Housing Corporation today released a new study – Examining Escalating House Prices in Large Canadian Metropolitan Centres. The analysis shows that strong economic and population growth, together with low mortgage rates, have been important drivers of house price growth in Canada. As well, it also shows that the supply response has been weaker in Toronto and Vancouver, than in other Canadian metropolitan areas.

The report looked at data from Toronto, Vancouver, Montreal, Calgary and Edmonton from 2010 to 2016. These cities show marked differences in the growth of their prices. While Toronto and Vancouver showed large and persistent increases in prices, there was only modest price growth in Montréal. Despite softer local economic conditions, home prices rose slightly in oil-dependent Calgary and Edmonton. 

Additional key findings:

• House prices increased by 48% in Vancouver from 2010 to 2016 with conventional economic factors such as growth in population and disposal income, as well as low mortgage rates accounting for nearly 75% of that rise.
• House prices increased by 40% in Toronto over the same time period with 40% of the rise being explained by conventional economic factors.
• Price increases have tended to be greater for more expensive single-detached housing, rather than for condominium apartments.
• Supply responses have been proportionately greater for condominium apartments than for single-detached housing.
• Investor demand for condominium apartments has increased. In turn, this increase lifts the supply of rental properties, but these units tend to be more expensive than units from existing purpose-built rentals. There appears to be a wider prevalence of mortgage helpers as well.
• Measures targeted at alleviating supply challenges are more likely to have positive impacts on high-priced markets than measures focused on the demand sideThe report represents one of the most thorough examination of house price patterns ever completed in Canada and is the result of advanced, data-driven analyses and engagement with stakeholders and government partners. Models and data sets that support the study’s conclusions will be made available on CMHC’s website in the coming weeks.

As Canada’s authority on housing, CMHC contributes to the stability of the housing market and financial system, provides support for Canadians in housing need, and offers objective housing research and information to Canadian governments, consumers and the housing industry

“While it is true that the supply response in Toronto and Vancouver has been significantly weaker than in other Canadian metropolitan areas, we do not fully know why this is the case. There continues to be data gaps and we need to work more closely with jurisdictions at all levels to fully understand what is happening.”