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Toronto and Vancouver Lead Canada's Housing Price Surge: What's Driving the Numbers and What It Means for Home-Buyers

  //house-home.news-articles.net/content/2025/12/0 .. e-numbers-and-what-it-means-for-home-buyers.html
  Published in House and Home on Tuesday, December 9th 2025 at 13:45 GMT by National Post

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Toronto and Vancouver Lead Canada’s Housing Price Surge: What’s Driving the Numbers and What It Means for Home‑Buyers

Over the past decade, Canada’s two most populous cities—Toronto, Ontario, and Vancouver, British Columbia—have become the poster children for a nationwide housing‑price spiral. According to a recent article in The National Post, both markets have seen double‑digit annual increases that outpace inflation, wage growth, and even the rate of new construction. The piece lays out the forces behind the surge, the ripple effects on the broader economy, and the policy options that might curb the trend.

1. The Numbers: A Quick Snapshot

• Toronto: Median single‑family home prices have risen by roughly 45% over the last five years, reaching the $1.4‑million mark. Condominiums, meanwhile, have seen a similar trajectory, with the average unit now hovering around $750,000.
• Vancouver: The city’s median home price is around $1.2 million, a 40% increase over the same period. Condos, which dominate Vancouver’s real‑estate mix, are now costing about $600,000 on average.
• National Comparison: While the national average has climbed 20% over five years, the sharpest gains have been concentrated in the two metros, underscoring a growing regional disparity.

These figures are not just statistics—they signal a shift in the way Canadians think about ownership, wealth, and place.

2. Why Are Prices So High?

a. Supply‑Side Constraints

Both Toronto and Vancouver have strict zoning codes that limit how many units can be built in a given parcel of land. In Toronto, the “Toronto 2030” plan has aimed to add 200,000 units, but regulatory bottlenecks—such as lengthy environmental reviews and community opposition—have slowed progress. Vancouver’s “Vancouver Plan” has similar hurdles, compounded by the city’s hilly terrain, which makes new construction costly and complex.

b. Demand from Domestic and International Buyers

Canada’s immigration programs have funneled a steady stream of newcomers into the West, with many choosing to settle in Toronto or Vancouver. Coupled with a high‑income demographic that sees real‑estate as a safe investment, domestic demand has surged. International buyers, particularly from China and the Middle East, have also contributed—although their influence has fluctuated with tightening cross‑border rules and currency swings.

c. Low Interest Rates and Credit Availability

For several years, the Bank of Canada kept policy rates near zero, and mortgage rates followed suit. Cheap borrowing encouraged buyers to lock in mortgages and push prices higher. The article notes that mortgage interest rate caps, introduced to curb speculative buying, have had limited impact in the two cities, where demand remains inelastic.

d. Urbanization and Lifestyle Preferences

A post‑pandemic shift to remote work has made proximity to city amenities less critical for some. Yet the allure of cultural hubs, higher wages, and better infrastructure keeps people gravitating toward Toronto and Vancouver. Real‑estate developers, capitalizing on this trend, have increased density projects—often at the expense of affordable housing.

3. The Broader Economic and Social Impact

a. Affordability Crisis

The article emphasizes that housing affordability has hit a tipping point. According to the Canada Mortgage and Housing Corporation (CMHC), only 14% of the average Toronto household can afford a typical home without dipping into savings or borrowing beyond recommended limits. In Vancouver, the figure is slightly higher at 18%, but still alarmingly low.

b. Inequality and Gentrification

Higher prices have accelerated gentrification, especially in previously lower‑income neighbourhoods. Long‑time residents are being priced out, and the cultural fabric of certain districts is changing rapidly. The National Post piece cites case studies in Toronto’s Leslieville and Vancouver’s Kitsilano where rents have doubled in under five years.

c. Housing Supply’s Effect on the Economy

A housing shortage can ripple into other sectors. For example, construction employment has surged, but the cost of materials and labor keeps inflating, putting pressure on the broader economy. The article also links housing price growth to rising student debt and decreased consumer spending—two factors that could temper future GDP growth.

4. Policy Responses Under Scrutiny

a. “Supply‑Side” Interventions

Governments are exploring measures to increase density—such as easing zoning restrictions and expediting permitting processes. Toronto’s municipal council has proposed allowing “densification incentives” for developers who build affordable units. Vancouver’s city council, meanwhile, is debating a “developer contribution” scheme, which would require new projects to fund affordable housing directly.

b. “Demand‑Side” Measures

Some policy analysts advocate for stricter mortgage underwriting, higher down‑payment requirements for foreign buyers, and tighter loan‑to‑value ratios. The article cites a recent study by the Canadian Mortgage Investment Corporation that suggests these steps could cool speculative demand without hurting the broader market.

c. Taxation Strategies

The federal government has considered a “foreign‑buyer tax” to dissuade non‑resident speculation. Provincial governments, too, are debating additional property transfer taxes. The National Post notes that, while these taxes may reduce demand, they also risk pushing buyers into private markets or overseas investments.

d. Rent‑Control and Rent‑Price Regulations

Toronto has introduced a “fair‑rent” framework that caps rent increases for older apartments. Vancouver is still debating whether to adopt a similar approach. The article stresses that while rent control can protect tenants, it can also discourage investment in rental stock if not paired with incentives for new construction.

5. What Does the Future Look Like?

The National Post article ends with a cautious outlook: housing prices are expected to rise modestly in the next few years, but the rate of increase could slow if policy changes take effect and if interest rates rise. The key unknowns include:

• The trajectory of the global economy—a stronger dollar could dampen foreign investment.
• Future changes to immigration policy—higher or lower intake numbers will alter demand.
• The pace of technological disruption in real‑estate financing—fintech could open up new markets or make traditional mortgages less relevant.

For potential home‑buyers, the takeaway is clear: entering the Toronto or Vancouver market now requires a robust financial plan, a realistic appraisal of affordability, and an understanding that long‑term price volatility could persist. For policymakers, the challenge remains to balance the need for housing supply with the social imperative to keep cities livable for all income levels.

6. Additional Resources

• Toronto 2030 Plan: A municipal strategy aiming to double the city’s housing supply by 2030. (Link inside the article)
• Vancouver Plan: The city’s blueprint for managing growth, zoning, and affordable housing. (Link inside the article)
• CMHC Affordability Report: Offers data on household income vs. housing costs across Canadian cities. (Link inside the article)

These documents provide deeper dives into the statistics and policy proposals mentioned in the article, giving readers a fuller picture of the forces shaping Canada’s housing landscape.