Canadian home prices up, frustrating Hongkongers waiting to buy
HK buyers hoping for a correction before diving into the Canadian market may just have to wait
Canada's housing market has long defied predictions of an imminent United States-style collapse, and Hong Kong investors waiting for a correction to buy will be disappointed by the latest data.
Prices edged up 1.9 per cent last month from a year earlier, led by gains of 3.4 per cent in Toronto and 6.7 per cent in Hamilton, which is near Toronto and close to the US border, according to the Teranet-National Bank Composite House Price Index.
That index is a weighted average of prices, drawn from property records in public land registries in 11 cities across the country.
The Canadian Real Estate Association says sales rose 9.4 per cent last month from July last year, when mortgage lending rules were tightened and guidelines introduced.
Vancouver saw home sales surge 40 per cent from a year ago but rose 12 per cent from June.
The association's data shows the average price of a home in Canada during the month was C$382,373 (HK$2.9 million), up 8.4 per cent from a year earlier.
In a bid to make homes more affordable to first-time buyers - who would have to work for 15 years on average before they can scrape together enough to make the down payment on a home - developers are building flats as small as 400 square feet - about a third bigger than the 300 sq ft saleable areas often seen in Hong Kong.
The Canadian Home Builders Association said the average size of a new home had dropped to 1,900 sq ft - down from the mid-2000s peak of 2,300 sq ft.
Young couples with children in Toronto who need more space are being driven further out, to new towns such as Milton, more than an hour's commute from the city centre.
A relative of mine in Canada, who is in his late 20s, started a second job at a supermarket recently. He works there part-time, three nights per week, after finishing his day job at a property valuation firm. He took on the extra work so that he can repay the mortgage on the semi-detached house he bought last year for C$460,000.
He was delighted by last month's statistics, which indicated his house was now worth C$500,000.
Some analysts expect sales to slow later this year, after banks began to raise interest rates on new mortgages in June. Others reckon the government will implement measures if signs of a bubble emerge.