Are you looking for houses in Canada? Worried it might be too expensive? Here is why.
Canada is a developed country. Thus, the quality of life here is impeccable. It is also a strong economy with excellent public services. But with everything being so perfect, the only worrisome issue that is giving Canadians migraine is- “expensive houses”.
In this blog, we will figure out various factors that have somehow contributed to the high costs of houses in Canada.
5 Reasons Why Houses in Canada Are Expensive
Here are some reasons why houses in Canada are expensive.
1. Stricter Government Regulation
Did you know that building regulations in Canada are way stricter than in any other part of the US? Yes, it’s right. Due to these restrictions, only a few buildings are constructed every year. This might sound normal to you, but in reality, such rules increase the costs and time of building.
The best example is the rule imposed by the “National Building Code in Canada”. According to this, every building must have a certain level of energy efficiency rating in winter. Most houses and buildings in Canada surround the suburbs and urban cities.
It makes builders accountable for local restrictions as well. All these overlapping rules and regulations, unnecessarily increase the cost of construction and time of building.
2. Foreign Investment
If a market is hot, investors will come running, right? In terms of foreign investment, the policies of Canada are quite liberal and welcoming. But gradually they are hindering the local buyers and putting a strain on it.
Why do you think foreign investors come to Canada? Their sole purpose is to redevelop or hold the property until profits. If they are holding for profits, the prices are bound to increase. This will create a shortage of supply and ultimately the buyers have to buy at expensive prices.
All these issues led to a “2-year ban on foreign investment” in Canada. It is enough to give you an idea about how foreign investors are creating a drastic effect on local home buyers.
3. Increase in Immigration
In the world, Canada has the 8th highest number of immigrants despite its limited population. You will be surprised to know that one out of every five Canadians is born in some foreign land. So, it is fair to say that this country is very welcoming towards immigrants.
States with high immigrants end up having low house supply because it is difficult to fit new houses and forecasting demand is never easy. The situation is exactly the opposite in states with lower numbers of immigrants.
There is no law in Canada that mandates where immigrants should live. But considering how big this issue has become for residents, something can be done. The right to get an affordable house to live-in is for everybody.
4. High Rates of Urban Living
Almost 80% of the Canadian population resides in urban cities. These urban cities are majorly bordering the US. The whole demography of Canada is aligned in such a way that the northern region is sparsely populated. Most of the homeowners live in major cities like Toronto, Ontario, and Montreal.
It is obvious that if everyone keeps looking for houses in the same cities, the prices will shoot up. People want similar kinds of homes in mostly the same cities.
Hence, the demand increases. Now if 4 out of 5 residents look for a property in the same area, the prices will definitely go up. In simple words, it is just a market explosion.
5. Higher Housing Demand
Canada is definitely a desirable country with low crime rates and high quality of life. It’s easy policies for immigrants and foreign investors able to exploit the markets are some add-ons. All this increases the housing demand. Some people have settled on the sides in small houses.
As the generations are progressing, they want to buy their house first. Later on when the family expands, so does the house. Whereas investors only want to flip homes until they can maximize their profits. Everyone has an agenda. But one thing that is constant is the need to buy a house.
Basically, it is a never-ending cycle. With such huge demand, the supply is very low which causes an increase in the prices of homes.
Average Housing Cost in Different Cities of Canada
In every country, some states are much cheaper to live in than the rest. Here in Canada, every state seems to be in a race to become more expensive. Do you want to know which state is affordable and which is not? Here is the answer: (All the figures are updated till the June, 2024 reports)
| States | Average Cost of Housing |
| Quebec | $506,224 |
| Ontario | $884,761 |
| Nova Scotia | $460,753 |
| Alberta | $503,502 |
| New Brunswick | $329,307 |
It is evident that New Brunswick is comparatively cheaper and Ontario is the most expensive state listed with an average housing cost of $884,761. The thing is that every state’s prices will vary. Moreover, inside each state, the average housing cost will vary.
There are still so many states not mentioned in the table like British Columbia that is “the most expensive area” to live in. Some other states where housing is expensive include- Toronto, Vancouver, and Calgary. So now you know which state is affordable and which is not.
Expensive Houses in Canada: Key Takeaway
If we look at projections then the houses in Canada will remain expensive until the foreseeable future. Sellers will no longer abate, supply remains low and immigrants in Canada are increasing.
Though the Canadian Government has raised these issues and is working on to alleviate this problem, it is unlikely that it will be resolved anytime soon. Irrespective of the prices, this country will remain to be the hottest property market in the globe.
But if you want to buy an affordable property then maybe Canada isn’t the best choice.
Which part of Canada has seemingly affordable properties for people? Comment down the names below.