Short supply, bad infrastructure blamed for Canada housing bubble
By Andrea Hopkins
OTTAWA (Reuters) - A shortage of land for development and inadequate infrastructure are fueling the massive spike in Canada's house prices and may undercut the government's efforts to stabilize the market, according to developers and realtors.
Supply is especially acute in the frothiest markets of Toronto and Vancouver, where strict greenbelt rules and limited transit beyond protected land hamper development.
While Canada has plenty of land and not that many people, most of its 36 million population lives along the U.S. border, and 81 percent live in an urban area.
Immigration has centered on the big cities, with the dream being to own a house and garden.
"Culturally and socially, the detached house with some land is both what most homeowners have, and what most people's notion of homeownership is," said Tsur Somerville, a University of British Columbia business professor.
"The cultural social norm is something that is really hard to provide in Vancouver and Toronto."
Prices have soared 205 percent in Toronto and 249 percent in Vancouver over the past decade. In the last 12 months, house prices are up 14.6 percent in Toronto and 25.8 percent in Vancouver, according to the Teranet-National Bank price index.
"Everyone has the goal of wanting to be more green and more sustainable ... but the problem from a housing perspective is if you constrain housing supply, you're going to drive up prices within that boundary," said Ben Myers, senior vice president at Fortress Real Developments in Toronto. Continued...