TORONTO —
Toronto is one of seven world cities most at risk of a residential real estate bubble, according to a new report released by UBS this week.
Toronto scored 1.96 in the UBS Global Real Estate Bubble Index, the third-highest score below Frankfurt and Munich, which scored 2.26 and 2.35, respectively.
The bank’s report scores 25 cities across the world, sorting them into four tiers: bubble risk, overvalued, fair valued, and undervalued with higher scores going to locations with higher risk.
Toronto is in the bubble risk category for the third consecutive year, surpassing Hong Kong, Paris and Amsterdam.
UBS says Vancouver real estate had dropped out of bubble risk territory this year but is still overvalued, with a score of 1.37, down from 1.92 in 2018.
Other overvalued cities in the report were New York, San Francisco and Sydney, Australia with scores less than 1, while Boston, Singapore and Dubai had fair real estate values and Chicago real estate was considered undervalued.
The scores are based on how home prices compare to incomes and rents, and whether mortgage lending and construction spending are excessive compared to the growth in the overall economy.
The scores do not predict whether or when a bubble will “pop” and cause home prices to fall. The existence of a bubble, UBS said, “cannot be proved unless it bursts.”
Instead, the authors write, they are comparing present conditions with housing bubbles throughout history. UBS gives cities a score -1.5 if they are depressed, -1.5 to -0.5 if they are undervalued, -0.5 to 0.5 if they are fairly valued, 0.5 to 1.5 if they are overvalued and above 1.5 if they are a bubble risk.
For Toronto and Vancouver, UBS looked at statistics from Statistics Canada, the Bank of Canada, Sauder School of Business, Canada Mortgage and Housing Corp, Toronto Regional Real Estate Board, condos.ca and Real Estate Board of Greater Vancouver, among other sources.
Demand for single-family homes in the suburbs have pushed Toronto prices up nearly six per cent in four quarters, stretching affordability, the report said.
“Given Toronto’s robust population growth and lower mortgage rates, prices there have doubled within only a dozen years,” the report said.
“Moreover, the expected appreciation of the Canadian dollar will curb the appeal of Toronto’s property to foreign buyers when travel restrictions are lifted.”
In Vancouver, home valuations remain “sky high,” but have eased amid vacancy fees, a foreign-buyers’ tax and less immigration, UBS said. After a 10 per cent drop between 2018 and late 2019, the authors said Vancouver home prices have stabilized thanks to falling mortgage rates and rules that let potential buyers qualify for higher mortgage loans more easily.
Overall, about half of the cities in the report were either bubble risks or “significantly” overvalued. The report’s authors said that four quarters of rising real estate prices during a global recession is “unsustainable,” noting that it has been nearly 15 years since prices rose in so many global cities at once.
“It is uncertain to what extent higher unemployment and the gloomy outlook for household incomes will affect home prices…rents have been falling already in most cities,” said Mark Haefele, chief investment officer at UBS Global Wealth Management, in a statement.
As the COVID-19 pandemic causes people to “reconsider where to live,” UBS predicts that there will be less demand for housing in cities.
“The rise of the home office calls into question the need to live close to city centers. Pressure on household incomes cause many people to move to more affordable suburban areas,” said UBS real estate chief Claudio Saputelli in the report.
“Already debt-ridden or economically weaker cities will have to respond to this economic crisis with tax increases or public spending cuts, neither of which bode well for property prices.”
UBS also urged first-time home buyers to consider building up wealth with a focus on more liquid assets to diversify their investments outside of their homes.
“The current cities at bubble risk seem to be weathering the coronavirus crisis relatively well. The local economies in Munich, Toronto and Hong Kong will likely recover quickly,” said Matthias Holzhey, lead author of the study.
But, Holzhey added, even if home prices don’t plunge, there isn’t much more potential for capital gains.
This report by The Canadian Press was first published Oct. 1, 2020.
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.
