Canadian real estate buyers pay steep premiums to own, compared to their global peers. IMF research shows Canada’s house price-to-rent ratio, the difference between renting and buying, is one of the highest in the world. Owning a home in Canada more closely resembles ratios in countries like Latvia and Slovak Republic, than countries like the US and Australia.
House Price-To-Rent Ratio
The house price-to-rent ratio is the annual cost to carry a house, compared to rent in the region. Ownership costs include some other fees like property taxes, but also leave out some costs like maintenance. The ratio does not tell us anything about “affordability,” since income isn’t a factor. Instead, it strictly compares ownership vs renting. Looking at this number, we find out what kind of premiums homeowners are willing to accept paying.
There’s a few reasons you want to look at these numbers, but the biggest is relative consumer value. The ratio is often used by economists to determine whether a market is fair, undervalued, or in a bubble. The most notable use of these ratios was during the US housing crisis, during which researchers flagged the ratio’s performance in 2004, when it passed 115%. Four years later, the US was declared a bubble as it collapsed and people flowed away from ownership. Now let’s look at where Canada is, in the context of the rest of the world.
Canada’s House Price-To-Rent Ratio Is The Highest In The G7
Canada currently has one of the highest house price-to-rent ratios in the world. The ratio was 122.43% in 2019, meaning it costs 22.43% more to buy than rent. Overall, it’s the 8th highest in the world. No G7 country ranks above Canada, with mostly smaller, developing economies ranking above. This is likely why Canada has so many negative cap landlords currently in the market.
House Price-To-Rent Ratio
The house price-to-rent ratio for IMF tracked real estate markets in 2019.
Source: IMF, Better Dwelling.
Canada’s Ratio Is Higher Than 80% of Economies Tracked
Canada’s house price-to-rent index is substantially higher than its international peers, especially the US. About 80% of countries tracked by the index have lower ratios. The US is all the way down at number 25 with 108.99%. Canada’s premium is closer to countries like Latvia and the Slovak Republic, than the US.
This year is only half over, but Canada’s numbers are likely to change – and not in the direction one might expect. Rents are currently falling, especially in cities like Toronto and Vancouver. Meanwhile, house prices have managed to stay at a similar level or even rise. This would send the ratio even higher, unless house prices see similar drops as well. There’s a few forecasts that see house prices following rents in the second half of 2020, but so far there’s limited movement.
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HALIFAX – A village of tiny homes is set to open next month in a Halifax suburb, the latest project by the provincial government to address homelessness.
Located in Lower Sackville, N.S., the tiny home community will house up to 34 people when the first 26 units open Nov. 4.
Another 35 people are scheduled to move in when construction on another 29 units should be complete in December, under a partnership between the province, the Halifax Regional Municipality, United Way Halifax, The Shaw Group and Dexter Construction.
The province invested $9.4 million to build the village and will contribute $935,000 annually for operating costs.
Residents have been chosen from a list of people experiencing homelessness maintained by the Affordable Housing Association of Nova Scotia.
They will pay rent that is tied to their income for a unit that is fully furnished with a private bathroom, shower and a kitchen equipped with a cooktop, small fridge and microwave.
The Atlantic Community Shelters Society will also provide support to residents, ranging from counselling and mental health supports to employment and educational services.
This report by The Canadian Press was first published Oct. 24, 2024.
Housing affordability is a key issue in the provincial election campaign in British Columbia, particularly in major centres.
Here are some statistics about housing in B.C. from the Canada Mortgage and Housing Corporation’s 2024 Rental Market Report, issued in January, and the B.C. Real Estate Association’s August 2024 report.
Average residential home price in B.C.: $938,500
Average price in greater Vancouver (2024 year to date): $1,304,438
Average price in greater Victoria (2024 year to date): $979,103
Average price in the Okanagan (2024 year to date): $748,015
Average two-bedroom purpose-built rental in Vancouver: $2,181
Average two-bedroom purpose-built rental in Victoria: $1,839
Average two-bedroom purpose-built rental in Canada: $1,359
Rental vacancy rate in Vancouver: 0.9 per cent
How much more do new renters in Vancouver pay compared with renters who have occupied their home for at least a year: 27 per cent
This report by The Canadian Press was first published Oct. 17, 2024.
VANCOUVER – Voters along the south coast of British Columbia who have not cast their ballots yet will have to contend with heavy rain and high winds from an incoming atmospheric river weather system on election day.
Environment Canada says the weather system will bring prolonged heavy rain to Metro Vancouver, the Sunshine Coast, Fraser Valley, Howe Sound, Whistler and Vancouver Island starting Friday.
The agency says strong winds with gusts up to 80 kilometres an hour will also develop on Saturday — the day thousands are expected to go to the polls across B.C. — in parts of Vancouver Island and Metro Vancouver.
Wednesday was the last day for advance voting, which started on Oct. 10.
More than 180,000 voters cast their votes Wednesday — the most ever on an advance voting day in B.C., beating the record set just days earlier on Oct. 10 of more than 170,000 votes.
Environment Canada says voters in the area of the atmospheric river can expect around 70 millimetres of precipitation generally and up to 100 millimetres along the coastal mountains, while parts of Vancouver Island could see as much as 200 millimetres of rainfall for the weekend.
An atmospheric river system in November 2021 created severe flooding and landslides that at one point severed most rail links between Vancouver’s port and the rest of Canada while inundating communities in the Fraser Valley and B.C. Interior.
This report by The Canadian Press was first published Oct. 17, 2024.
