What’s driving Toronto house prices through the roof? Experts weigh in
TORONTO — The average selling price of all homes in the Greater Toronto Area skyrocketed last month, climbing 33.2 per cent from a year ago to $916,567. The latest data from the Toronto Real Estate Board comes as policy-makers mull potential measures to slow the rapid pace of price growth. Here are some of the factors believed to be playing a role in the upwards trajectory of house prices in Canada’s largest city:
Immigration: The arrival of newcomers to the city is a frequently cited reason for rising prices. Roughly 120,000 people immigrated from outside of Canada into Ontario from July 1, 2015, to June 30, 2016, according to Statistics Canada, with a sizable portion of them landing in the Toronto area. “Toronto is a magnet for both other Canadians and for people from other countries, and it’s the economic engine of the entire country,” says Dianne Usher, senior vice-president at Johnston and Daniel, a division of Royal LePage.
Lack of supply: One of the culprits often fingered for soaring prices in the Greater Toronto Area is the lack of developable land. In 2005, the Ontario government introduced the Places to Grow Act, a piece of legislation aimed at protecting the Greenbelt and curbing urban sprawl. However, the legislation is often also blamed for escalating real estate prices, as some argue there isn’t enough land to build homes.
Usher says the two land transfer taxes that Torontonians have to pay have also discouraged many from selling their homes, further exacerbating the supply problem. “It’s stopping people from moving up,” says Usher. “They’re renovating and adding on instead of moving.”