Rise of House Prices in Toronto Causes Concerns
If you’ve been searching for a property in Toronto these past couple of months, you will have probably noticed that the average selling price of homes and apartments in the city has been on the rise. It’s not a small jump either; the price of properties has increased by around 30% this past month alone.
Experts are beginning to show concern. Is this another property bubble? According to some, there are several very logical reasons why house prices are on the rise, especially in the Greater Toronto area.
Rise of Immigration
We’re seeing more immigrants entering the city and contributing to the rise of house prices. The increasing number of immigrants is a clear sign that demand for housing is climbing too. Following the natural market law, a sudden increase in demand tends to lead to price increases.
Around 120,000 new immigrants entered Ontario last year. That number has continued to increase by a substantial amount this year, causing not only house prices but also rents to jump in various areas around the province. Toronto is where the increase has been most apparent due to the fact that a lot of people are opting to live in the city because of the access to better jobs and quality of life.
It is important to keep in mind that a flow of immigrants entering the city is just one of many reasons why house prices are on the rise. However, the increase in demand may soon cause housing issues if not taken care of properly.
Lack of Supply
We don’t really have muchdevelopable land left in Ontario, which is why it is difficult to improve the supply of houses in the province. Even areas outside the city of Toronto have already been developed, and those who have the ability to move to a bigger property aren’t really considering the option due to the two land transfer taxes.
Many homeowners are preferring to renovate and develop their existing properties. The availability of facilities such as construction equipment and disposal bin rental is making renovation projects easier to handle; on top of that, the costs of renovating a house and adding new features to it are often lower than the cost of selling it and relocating.
Speculators on the Market
The real problem with the rise in house prices is the fact that speculators are now starting to enter the market. Instead of making the situation better, they are actually making things worse. Speculators are willing to invest in properties at slightly higher prices before holding on to them for short-term gains. Considering the hike is quite steep, these speculators bear minimum risks while pursuing a substantial capital gain.
All of these factors are manageable, but they still pose a serious threat if not taken care of properly. Fortunately, the officials in Toronto as well as other cities in Ontario are preparing to take the necessary steps to influence the property market. We’ll have more updates from this story soon, so stay tuned right here on Before It’s News.
