Toronto's housing market ranked the most over-valued in the world
The notion that Toronto's housing market is inflated and overvalued shouldn't come as a surprise to anyone, but put in a global context, our real estate picture is a bit more scary.
According to a new report, Toronto has the most over-valued real estate market in the entire world. This means we are most at risk of a housing bubble, which experts have been warning of for years.
UBS, a Switzerland-based financial services company, just put out a report ranking real estate markets in 20 major international cities.
Toronto made its shining debut to the list this year, right at number one. To no one’s surprise, Canada is also represented by Vancouver in the fourth place spot.
A housing bubble is a phenomenon where the demand for housing far exceeds the supply, causing costs to skyrocket. The theory is that the housing bubble will “burst,” which may lead to a huge collapse in prices and the market.
The diagnosis of a housing bubble in Toronto is based on the stats that show prices have increased 50 percent over the last five years - a staggering number. A cooling trend has been noted more recently, but not in time to sway this report.
The UBS says that a strengthening loonie and increase in interest rates by the Bank of Canada may give us reason for optimism in terms of house prices. They also note that the various measures put in place via the Fair Housing Plan could help to stabilize the market.
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