Land supply constraints is the biggest factor. Natural constraints like water, mountains, are huge as are zoning restrictions in housing price appreciation. These often lead to more NIMBYism and the cartelization of land ownership: https://fortressrealdevelopments.com/news/take-advice-housing-professionals-not-amateurs/"To improve affordability, both governments and we, the public, have to make changes that address each of the different contributing factors to current market conditions: foreign capital, local demand, and constraints on supply."
Full article: http://www.theglobeandmail.com/opinion/ending-self-regulation-in-vancouver-real-estate-wont-solve-the-market-crisis/article30739247/
However, the watchdog is pledging to keep a tighter grip by “enhancing its supervisory scrutiny.” And it is extremely rare for the regulator to be so open about its concerns. Any worries OSFI has are typically kept secret and dealt with behind closed doors.
OSFI is worried because the toxic combination of persistently low interest rates, record levels of household debt and rapidly increasing house prices in areas such as Greater Vancouver and Toronto “could generate significant loan losses if economic conditions deteriorate.”
OFSI sounds worried about liar loans...wait I thought that only happened in the U.S.?To crack down, the regulator will give extra scrutiny to a few key areas of lending: income verification, non-conforming loans, debt service ratios and appraisals.
Excuse the [...] but wanted shorten the quote. The problem with this is that rising property prices, at a certain point, lead to residents being forced to live far from where they work, which is the precise opposite of current planning policy calling for complete communities, and people living within walking/cycling distance of work.This is not a problem that is unique to Toronto and Vancouver. Every major city, New York, London, Singapore, Tokyo etc. has the same problem....
The only reason the government is considering getting involved is because some middle-class Canadians are saying "Twenty years ago we could have bought a house in High Park and paid it off in less than thirty years, now we can't. Do something about it." ... If they want to live in the Toronto or Vancouver markets they need to downsize or look to less desirable neighbourhoods. While it may make individual home buyers unhappy - from a societal point-of-view I don't think either of those are a necessarily bad things.
Toronto and Vancouver are just a few of the cities which property is used to launder foreign money and so forth. If all countries (US, CAN, UK, AUS) were equally priced then the foreign money would prefer them in this order:One thing I don't quite get is why the Canadian cities around Vancouver and to a lesser extent Toronto, the bubble came to be driven so much by and tied to specifically foreign and non-resident buyers and/or investors?
When you hear about other costly cities like NYC, the Bay Area, London etc., there's no doubt that foreign money is parked there too but it seems like gentrification in those places was driven by lucrative industry, and where it seems wealthy foreign buyers driving out less wealthy domestic buyers doesn't seem as much as an issue as wealthy domestic buyers driving out less wealthy locals.
So why do many foreign investors make up such a huge share of buyers of these two cities in Canada (Toronto and Vancouver) when globally there's so many big cities in the western world? Is it just that we're the loosest and most permissive country when it comes to accepting foreign money, regardless of source, and others like the US, UK, Australia have more strict controls on it?