Demographia, a U.S. based consulting and research firm, just released some data on urban real estate markets. The data was used by the Visual Capitalist in one of their sleek graphics. What it showed was Toronto remaining as one of the world’s top ten expensive real estate markets. Canada’s biggest city ranked 7th on the world’s most expensive housing markets, ahead of tech mecca San Francisco (famous for extremely high rents), London, and Adelaide (an Australian city that’s seen some incredible price growth in recent years.) Toronto was beaten by Sydney, Melbourne, Vancouver, Los Angeles, and Hong Kong. Marking the huge economic and real estate disparities between upstate New York and Ontario, Buffalo NY was listed as a city with one of the lowest real estate values in the 8 countries and multiple cities listed in the Demographia study. Demographia’s data is from the third quarter of 2019, and there’s been even more price growth in Toronto since then.
One of the interesting areas of investigation for the report was land containment and regulatory regimes for house building. Not illogically, the study showed that the cities with the highest priced real estate were those with the most land and geographic constraints to building. Toronto was high up on the list given the large amount of green space, protected areas, national parks, and the Greenbelt in the vicinity of the GTA. The report noted that Toronto real estate prices rose from 4 times median annual earnings in the early 2000s to almost 10 times median annual earnings in 2019. While the overall focus of the report was on the unaffordability of housing, it shows just how valuable Toronto and southern Ontario real estate is in an international context – proving its utility to homeowners, and its growth potential and desirability for those working on getting into the housing market. What is unaffordable for some is a huge source of equity for others, and an opportunity for prospective buyers.
Demographia emphasized that the first order of demand preference in Toronto and across Canada was detached homes and not apartments or condos, pushing the demand for these types of housing up and placing pressure on available land for building. Demographia notes what Tembo has reported on in the rental sector: a recent surge in building, but noted that many of these new units are still too unaffordable for people. Finally, the report notes that London, ON has some of the most affordable housing in southern Ontario. This report is another indicator of the value of our real estate, as recognized internationally, and the strength of our real estate market compared to our counterparts and neighbours.