In today’s issue:
- Is Toronto For Sale? Who are the buyers and who is paying more?
- Where Chinese are looking globally?
- 10 Most Unaffordable Housing Markets
- New Development coming soon with 50,000 jobs: East Harbour Site
- New Ontario’s New LTT Rebate for First-Time Home Buyers
- Toronto Real Estate Board Market Reports January 2017
Is Toronto for sale ?
Who are the buyers and who is paying more?
For the last couple of years, and particularly the last twelve months, we have been hearing from our clients and even from our colleagues that the real estate market is crazy, that it is insane, unreasonable, and unaffordable. What is going on and where we are going?
When demand is high and supply is low, prices generally rise. That is just basic economics and goes some way to explaining what is going on in Toronto! We are low on inventory for every type of home, from condominium apartments to single family freeholds. We see more and more homes selling a a $1 Million over the asking price. Sometimes more than 50% over the asking price and, surprisingly, these are not always in the best areas!
The average selling price in the GTA was up by 22.3% to $770,745.00, in 2016, with double-digit gains in the average prices for all major home types including condos..
As a real estate professionals we are trying to understand and explain to our clients what we think about the Toronto real estate market and why this is happening? Why is the demand for Toronto homes so high?
Toronto is, perhaps surprisingly, NOT amongst 10 most unaffordable housing markets in the world. These are:
1. Hong Kong, China
2. Sydney, Australia
3. Vancouver, Canada
4. Auckland, New Zealand
5. San Jose, California
6. Melbourne, Australia
7. Honolulu, Hawaii
8. Los Angeles, California
9. San Francisco, California
10. Bournemouth, UK
Toronto is still considered to be affordable, which is somewhat reflected in the fact that we see that 51% of the purchasers are first time buyers.
Population growth, low mortgage rates, low unemployment and an above-inflation economic growth has resulted in strong housing demands and very low inventory available, result in the price growth.
Moreover, Toronto is a very young city. We’re all happy to see like our city is changing for the better. We do not believe that our mayor, John Tory, is doing a good job on Toronto streets, but we can definitely appreciate the developers for making our city every year better and better. That is why Toronto has become one of the most liveable cities in North America. We only wish we had a shorter winter, but then, we would also have Vancouver prices!
Another reason for price growth is low Canadian dollar and huge number of foreign buyers , in the market.
Below you can read the article by Juway real estate, from China. It states that the majority of investments by Chinese buyers are going to English speaking countries.
1. United States
4. New Zealand
5. United Kingdom
As the Chinese economy continues to grow, we should expect more investors from China in the Canadian real estate market. Today, when we sell a condo or a house as the listing agents, we expect the highest offer from the Chinese buyers and that’s almost always the way it works out. They always pay more!
Unfortunately, the Toronto real estate board and Canadian government do not collect information about the percentage of foreign buyers. The survey data collected from 3500 TREB members last year shows that the number of foreign buyers is estimated at between 4.9-6%, please click here for the full report >>.
We can only judge from our own experience and we believe that this information is not accurate and the percentage of foreign buyers in the GTA is much higher. Chinese buyers are spending $80 billion US dollars every year on overseas homes and good portion of this money is being spent in Canada and, specifically, the GTA. Canada is the third most preferred country for investment by Chinese buyers.
This year, we should expect another 10-16% price growth in GTA and we believe that average price will reach $850,000.00. The average price for a condominium in Central Toronto has been reaching close to $1000 per sq.ft. And those prices are not for the best condos in Yorkville, like in days gone by. We are talking about most of the buildings in Central Toronto.
Is it a bubble or a growing city? I believe Toronto is a growing city where people are still willing to live their lives and invest their money. But time will tell!
Where Chinese are looking globally?
Chinese are buying properties abroad like there’s no tomorrow – investing over US$80 billion on international property last year alone.In fact, Chinese outbound real estate investment is slated to grow as much as 50% this year2, and this is following record-breaking property shopping sprees by Chinese throughout the world.This shows that Chinese overseas property investment is nowhere close to tapering of anytime soon. What’s more, Juwai research indicates that what we’ve seen so far is but the tip of the iceberg.Where are Chinese buyers looking to invest, though? We shed light on the top 10 countries most enquired by Chinese property investors on Juwai.com in the adjacent map.Interestingly, each Chinese buyer is diferent, and while many share similar yet somewhat distinct aspects, where they hail from influences their motivations and dictates their buying preferences as well.
Sources: 1.Juwai Research compiled from National Association of Realtors (NAR), Australian Foreign Investment Review Board, Savills, and National Bank of Canada; 2. Colliers International
10 Most Unaffordable Housing Markets
According to the 13th Annual Demographia International Housing Affordability Survey (2017), the 10 most unaffordable housing markets are as follows:
Hong Kong, China
Auckland, New Zealand
San Jose, California
Los Angeles, California
San Francisco, California
The survey measured the affordability of “middle-income” housing in Australia, Canada, China (Hong Kong), Ireland, Japan, New Zealand, Singapore, the United Kingdom, and the United States.
It is based on a “median multiple” approach, which tries to normalize house prices across the world by looking at median house prices over median household incomes.
The above list probably won’t surprise you, as well as the report’s focus on land supply. But I did want to call attention to the following remark:
My own housing research focused on this difference: Why did Germany (and similarly Switzerland) provide housing stability where much of the Anglosphere did not?
In a nutshell, the answer to this question has a lot to do with the way councils are funded. In jurisdictions where local decision-makers stand to gain from new development, they will be much more eager to make it happen.
The topic of incentives is not something that is often focused on when we talk about land supply. But it’s a really interesting point. Because the reality is that, in many cases, the incentives probably work in the opposite direction to the one described above.
New Development coming soon with 50,000 jobs: East Harbour Site
Last November, a preliminary master plan revealed the scope of First Gulf’s plans for the once-industrial expanse of Toronto land long referred to as the Unilever site.
Although public details of the plans for a new office, retail, and transit hub only date back to last year, the long-vacant site now feels more like a promise of the future than a relic of the past.
More than anything, it was the renderings of the transit hub that did it. Promising a futuristic, curving rail station, the sexy transit showpiece would be complemented by First Gulf’s vision for a new commercial centre employing some 50,000 people across almost 11 million ft² of new office space.
With detailed plans for the transit station now available – UrbanToronto’s in-depth look is available here – First Gulf’s submission to the city also details a comprehensive vision for the 60-acre (24 hectare) site now known as the East Harbour.
Predicated on the development of the much-needed Relief Line, enhanced GO service, and a new streetcar line, the futuristic transit hub – all grand arches and sleek curves – remains the locus of attention. Flanking it, a retail and employment hub is envisioned as as major commercial centre.
Master planned by Office for Metropolitan Architecture (OMA) and Adamson Associates, the proposal offers an early look at what promises to be a transformative development.
New Tax Rebate – Share the Good News
New Ontario’s New LTT Rebate for First-Time Home Buyers.
Effective January 1st, 2017, Ontario has doubled the land transfer tax rebate for first-time home buyers from $2,000 to $4,000. That means that a first-time home buyer will pay no provincial tax on homes sold for $368,000 or less.
Ontario REALTORS® lobbied hard for the improved rebate and we’re very proud to promote it to first-time buyers.
To help promote this new rebate we’ve created a website www.FirstHomeRebate.ca with an informative video and calculator that can help your clients figure out how much tax relief they can claim on their first home.
We’ve also equipped the site with tools and information you can share with prospective buyers to encourage them to get into the market.
REALTORS® and the Canadian Dream
As REALTORS®, we know home ownership is part of the Canadian Dream. It’s a source of financial security, drives economic activity and binds communities together. The benefits of home ownership are why OREA fights so hard to protect it and make it more affordable for young families.
So take a minute and visit www.FirstHomeRebate.ca, share it with your clients and be proud that Ontario REALTORS® are fighting to make home ownership more affordable.