February 7, 2018
New CMHC study sheds light on rising house prices
In June 2016, CMHC launched a study to better understand the causes of rapidly rising home prices in major metropolitan centers across Canada. The report represents one of the most thorough examinations of house price patterns ever completed in Canada and is the result of advanced, data-driven analyses and engagement with stakeholders and government partners.
Why undertake this kind of study in the first place?
Housing affordability challenges exist in many centres throughout Canada. Rapidly rising house prices in high priced markets have benefited existing homeowners, but have also created challenges for first-time buyers. However, this is not just an issue for first-time homebuyers. Rapidly rising house prices also tend to drive rents higher and increase the cost of rental assistance and non-market housing solutions.
What were the study’s findings?
In conducting this study, it was important to look at both supply and demand. Very briefly, we found that:
- Strong economic and population growth, together with low mortgage rates, have been important drivers of house price growth in Canada
- The increase in average house prices in Vancouver and Toronto is also attributable to rising income inequality in these centres — price increases have tended to be greater for more expensive single-detached housing, rather than for condominium apartments
- Supply response to rising house prices has been weaker in Toronto and Vancouver, than in other Canadian metropolitan areas
What are the next steps?
The report represents an important step towards stimulating discussion across all levels of government, housing advocates, industry, academia, and the general public — with the full recognition that this is the beginning of a process of improving the functioning of Canadian housing market.
Read more about the findings and what CMHC plans to do (PDF)