View of Toronto’s iconic skyline. (Photo: chensiyuan, Wikimedia Commons)
Toronto’s high quality of life, its welcoming attitude to immigrants, and its relatively lower cost of living, continue to attract foreign investors.
By Romesh Navaratnarajah
The Canadian city of Toronto regularly places at or near the top of the list for overall quality of living. This is not surprising, considering it ranks high for security, health and education. Its qualities have played a role in attracting many foreigners to live and work there, making it one of the most multicultural cities in the world.
The Greater Toronto Area has a population of about six million people spread over 7,124 sq km, almost 10 times the size of Singapore. With so much potential to grow, overseas investors are looking for new opportunities in the city’s property market.
Quality homes needed
But the market has its challenges too. Property investment advisory firm IP Global has been keeping a close eye on the Toronto housing sector for some time. Its Director, Alex Bellingham, pointed out that there is a chronic housing shortage in the city.
“The undersupply, coupled with Toronto’s strong immigration rate (around 80,000 people move to the city each year), has put upward pressure on real estate prices,” he said.
Data from the Toronto Real Estate Board (TREB) shows that the average selling price of a Toronto home was CAD$776,684 (S$842,501) in November 2016, up 22.7 percent from the previous year.
Time for cooling measures?
This begs the question of whether Toronto will consider following Vancouver’s move to curb speculation. Back in August this year, the province of British Columbia introduced a 15 percent tax for foreign buyers.
According to Bellingham, while the Ontario government recognises the importance of having control over the increasing house prices in Toronto, they are unlikely to follow Vancouver’s lead and introduce a foreign buyer tax for real estate at this time.
“As opposed to deterring outside investment, the Ontario government’s approach has been to encourage local investment,” he said. “In his last economic statement, Finance Minister Charles Sousa announced that there will be an increase in tax refunds for first-time home buyers. The refund will effectively remove the land-transfer tax from the first CAD$368,000 (S$399,185) of a home price for anyone buying their first home, helping to reduce the pressure that first-timers face.”
However, Jason Mercer, TREB’s Director of Market Analysis, believes more needs to be done. “Recent policy initiatives seeking to address strong home price growth have focused on demand. Going forward, more emphasis needs to be placed on solutions to alleviate the lack of inventory for all home types, especially in the low-rise market segments,” he said.
Demand for condos
Meanwhile, families that are being priced out by rising home prices are turning to the condo market, noted Bellingham. “This is part of a wider trend that we have seen, which is particularly prevalent among the Generation Y (millennials) and baby boomers who are looking to downsize.
“This surge in condo interest has been evident in downtown Toronto, which is seeing a spike in popularity. The downtown condo market is also being driven by schemes such as the Toronto Waterfront renewal, a multi-billion dollar project to develop a designated waterfront area between Coxwell and Dowling Avenues. This development will also help to solve the immediate needs of the local community, improve the environment, create economic activity and enhance the overall quality of life, making the area much more attractive to investors.”
The Simcoe wavedeck in Toronto’s waterfront, which has undergone revitalisation. (Photo: Loozrboy, Wikimedia Commons)
Boom in transactions
Although there is an undersupply of new homes and prices have surged, the number of transactions has risen quite a bit. In fact, there were 8,547 home sales reported in the Greater Toronto Area in November this year, a 16.5 percent increase from November 2015, revealed TREB’s President Larry Cerqua.
He noted that sales were up for all major property types, with the strongest sales growth seen in the townhouse and condominium apartment segments.
“Home buying activity remained strong across all market segments in November. However, many would-be home buyers continued to be frustrated by the lack of listings, as annual sales growth once again outstripped growth in new listings,” said Cerqua.
The Trump factor
Looking ahead, the market shortage could worsen further if Americans decide to move to Canada following Donald Trump’s shock election win. Even though it was seen as a joke in the run-up to the US presidential election, findings presented by Expatistan, an international cost of living comparison website, reveal there was a 141 percent increase in US visitors to the portal a day after the election on 8 November.
Gerardo Robledillo, Founder of Expatistan, told PropertyGuru that the site also recorded a 245 percent jump in US visitors right after the election results were known, and the majority of those visitors were researching a move to Canada.
Bellingham, on the other hand, doesn’t think many US citizens will make the move north. But he added: “Should Trump’s victory spur Americans to emigrate over the border, then this will contribute to the pressures in Canada’s urban centres, such as Toronto, and we will likely see an increase in prices and rents.”
Cheaper place to live
Growing concerns over a new regime in Washington D.C. is probably not the only reason for wanting to move to Canada. Another factor is living costs. Robledillo shared that Toronto offers a lower cost of living. Of the 236 global cities tracked by Expatistan, Toronto is the 49th most expensive city for expatriates. New York, on the other hand, is ranked fourth, while London and Singapore are in 11th and 21st position, respectively.
CITY FAST FACTS
(GREATER TORONTO)
Population: Approx. six million
Total area: 7,124 sq km
Currency: Canadian dollar (CAD)
GDP per capita: CAD$61,000 (S$66,169)
GDP growth: 1.4 percent in 2016
Future transport: Expansion of the transit system
Average home price: CAD$776,684 (S$842,501)
Distance from Singapore: Approx. 15,000 km
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