According to a new report from Zoocasa, projected population growth in Canada will worsen the already limited housing supply and drive up housing prices. The report analyzed historical population growth along with house price data and found that national house price growth has “more than doubled or tripled” population growth in most years in 14 of the past 18 years. The report notes that “…the more people live in Canada, the greater the need for more homes, which will exacerbate the already limited supply of homes.” “In this sense, population does indeed influence the national average price because demand will continue to increasingly outpace supply.” She noted that Canada received 437,180 immigrants in 2022 – the largest number in Canadian one-year history, according to the Canadian Department of Immigration, Refugees and Citizenship. “Meanwhile, the national median home price rose to a monthly high of $804,900 — a 31% increase from 2021,” the report noted. Significant drop in housing prices ‘unlikely’ With the country expected to welcome more than 465,000 new immigrants annually, rising to more than 500,000 by 2025, the Zoocasa report expects continued pressure on housing supply in the coming years, which will apply upward pressure on housing prices. “Home price growth and population growth simultaneously trended upwards, and this is likely to continue at a faster rate in the future,” the report says. “Based on the past five years, housing prices have grown at an unprecedented rate, and although prices have stabilized since 2022, a significant downward trend is unlikely.” Mortgage and Other Real Estate Stories… Family Income of $175,000 Needed to Afford a 1,500-Square-Foot Home in Ontario A family income of more than $175,000 is required to afford an average 1,500-square-foot home in Ontario, according to a new report. Not surprisingly, the hellosafe report says Toronto remains the most expensive city in the province, requiring a gross annual household income of $591,828 to purchase a similarly sized home. This comes out to about $1,400 per square foot. That’s more than seven times the income required in the most affordable market, Timmins, with a household income requirement of just $64,896, or $203 per square foot. Other high-priced communities that require an unrealistic family income include Halton Hills ($570,154), Aurora ($519,838), and Richmond Hill ($511,235). Courtesy: Safe Canadian housing starts to rise in June Construction began on a record number of housing units in June, reversing a downward trend seen in recent months. The Canada Housing and Mortgage Corporation (CMHC) reported that new starts totaled 281,373 units in the month, compared to just over 200,000 units in May. This was the largest monthly increase in a decade. The increase was driven by the commissioning of new multiple units, which were up 59% month over month. On the other hand, single-family starts were a more modest 42,900 units, or 3% from May. But economists point out that one month is not a trend, especially for an indicator like housing starts, which can be volatile from month to month. “June is a strong month for housing starts, but one month isn’t enough to reverse the long-running downtrend in the sector,” noted Mark Erculao, economist at TD. The six-month startup average, a more indicative measure of overall trends, rose to 234,974 units, up 2.4% from the previous month. “This boom should be short-lived, and with interest rates still rising in the economy, home construction will be a drag on housing investment in the coming quarters,” Ercolau added. EQ Bank Launches No-Fee FHSA Savings Account This week EQ Bank unveiled a tax-exempt First Home Savings Account (FHSA) for prospective homebuyers. EQ Banks says the FHSA is the nation’s first “all-digital no-fee” FHSA savings account, and says it offers the best interest rate nationwide at 3.00%. First home savings accounts are relatively new, having only been available to prospective homebuyers as of this spring. The new plan on record, first introduced in the federal government’s 2022 budget, allows first-time homebuyers to save up to $40,000 for a down payment on their home on a tax-exempt basis. Similar to a Tax Free Savings Account (TFSA), money in the account can be put into a variety of investment vehicles, and can then be withdrawn tax free as long as the money is used to purchase a qualifying home. Although the government promoted the accounts as available from April 1, 2023, many of the country’s largest banks were not in a position to offer the accounts immediately due to the logistics of setting them up and running them and while they were awaiting guidance from the Canada Revenue Agency. National Bank was one of the first large banks to make FHSA available to customers in late April. “Fulfilling our ‘less take, more’ brand promise, we believe we have launched the best FHSA product on the market,” said Mahima Poddar, Group Head, Personal Banking at Equitable Bank. “We’ve always challenged the status quo in Canadian banking and wanted to do it again with FHSA — with flexible no-fee savings options, industry-leading rates, and an easy digital experience, all of which allow Canadians to get to home ownership faster.”
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