OPINION: The dichotomy of the Canadian residential market is more obvious than ever. The strength of the Canadian market is clearly driven by the Greater Toronto Area (GTA), Hamilton, Victoria (top chart) and seven other regions located in the Golden Horseshoe (region surrounding GTA) which are not incorporated in the Composite Index. All these regions have double-digit y/y house price growth and have displayed an impressive trend of price increases lately (middle table). The Non-Resident
Speculation Tax introduced in April by the Ontario government in the GTA and the Golden Horseshoe apparently had a dampening effect on sales and induced a rush to put homes on sale, but its effect on home prices remain to be seen according to the Teranet-National Bank HPI and to benchmark prices published by the Toronto Real Estate Board and by the Guelph and District Association of Realtors. In the meantime, if the measures taken last year to cool Vancouver’s market have worked for the detached and attached segments (with y/y price growth tumbling to 6.8% in May against 29.2% last August, the slowdown is much more mitigated for condo prices (up 17.8% y/y in May). This means that condo affordability in Vancouver could soon become as bad as it was at the beginning of 2008 (bottom chart).

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