Financially armed Chinese immigrants, pent up demand and low mortgage interest rates are starting to push prices up in the city’s real estate market
Andrea Pawlyna 27 January 2010
If Vancouver is a place that attracts retirees from Hong Kong, then Toronto is where immigrants from the city hope to find jobs.
“People from Hong Kong who come to Toronto are typically in the 40-60 age range. Most come because they have children and want them to have a Canadian education. Younger people stay in Hong Kong and older people are not used to the cold winters here,” says Bammy Wong, the president of the non-profit Asian Business Network Association.
The newly arrived often gravitate to the financial, insurance, real estate and administrative sectors. Others open restaurants or other traditional businesses, Wong says.
“It can be challenging for some who have to accept jobs below their skill level.”
But many come with sufficient financial resources to buy a home. “They’re looking in the C$400,000 [HK$3 million] to C$600,000 range. If a family cannot find a suitable home, they may live in a condominium for one or two years before they buy,” Wong says.
Families tend to buy single family homes in middle-class suburban areas with substantial Chinese populations such as Markham, Richmond Hill and Toronto city’s North York district, the eastern side of which is heavily Chinese.
Couples or first-time buyers prefer condominium units, a popular alternative to detached homes. The Greater Toronto Area (GTA) has about 255,000 condominium units, with a record 35,000 to 40,000 more under construction. North York also features a large number of condominium units close to the subway line.
Because of land constraints and a rapidly growing population within the Greater Toronto Area, more developers are leaning towards high-density development, such as condominiums. The GTA’s population grew by a million people over the past 10 years to about seven million. Like other cities around the world, Toronto has been hurt by the global financial crisis. Home sales began declining in June 2008 and hit bottom in January last year before starting to pick up in the spring.
Home prices fell about 10 per cent during the period.
Faced with a lacklustre real estate market in March, developer Concord Adex dangled a 20 per cent cash credit at the final closing for the first 20 units sold at its new 28-storey Panorama brick-and-glass waterfront condominium project in downtown Toronto.
“It created quite a buzz,” according to a company employee, who adds that all 20 units sold within an hour. Occupancy at the project, where units range in price from C$250,000 to C$1.5 million, is projected for completion by the middle of this year. The 20 units sold were in the mid-price range of C$350,000 to C$400,000.
The GTA’s housing market began to rebound in the second half of last year. Sales more than doubled year on year in November, with the average price for transactions up 14 per cent to C$418,460, according to the Toronto Real Estate Board.
Despite an unemployment rate in Toronto of 9.7 per cent, pent-up demand and low mortgage interest rates - less than 4 per cent for a five-year fixed rate mortgage - have lured many back into the market, particularly first-time buyers.
GTA home prices have risen 15 per cent to 20 per cent in the past six months and are now higher than their pre-crisis levels, says Shaun Hildebrand, an analyst for the Canada Mortgage and Housing Corp.
“But that isn’t sustainable, so we should see prices flattening next year,” Hildebrand says, adding that normal price appreciation is about 6 per cent a year.
A middle- to upper-middle-class community, Richmond Hill boasts annual average household incomes above C$100,000. “The homes are bigger and more modern - about 2,500 to 3,500 sqft,” says Simpson Lee, a manager/broker at Home Life New World Realty.
Ethnic Chinese make up 21.4 per cent of Richmond Hill’s population, according to 2006 census statistics. Lee says a four-bedroom 2,500 sqft single family home with a two-car garage ranges from C$550,000 to C$650,000.
Ideally suited for commuters, Markham is home to many hi-tech companies, with more than 1,000 technology firms along the border between Richmond Hill and Markham. The Canadian head offices of IBM, Motorola, Toshiba, Apple, American Express are among others are in Markham.
Chinese are the largest ethnic group in Markham, which also attracts many immigrants from East Asia, South Asia and Europe. A typical three bedroom 2,000 sqft home in Markham sells for C$450,000 to C$550,000, Lee says.
North York has 1,800 sqft homes with three to four bedrooms and two baths and has a wide price spectrum, from C$585,000 to C$1.6 million.
Prices for existing condominium units range from C$400 per square foot in North York and Markham to C$1,200 per square foot for new top-end luxury units.
The rental market has remained stable, with rates hovering at C$2 to $2.50 per square foot. Rent increases in Toronto are limited by rent control restrictions.
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Toronto a magnet for Hong Kong homebuyers
Financially armed Chinese immigrants, pent up demand and low mortgage interest rates are starting to push prices up in the city’s real estate market
Andrea Pawlyna
27 January 2010
If Vancouver is a place that attracts retirees from Hong Kong, then Toronto is where immigrants from the city hope to find jobs.
“People from Hong Kong who come to Toronto are typically in the 40-60 age range. Most come because they have children and want them to have a Canadian education. Younger people stay in Hong Kong and older people are not used to the cold winters here,” says Bammy Wong, the president of the non-profit Asian Business Network Association.
The newly arrived often gravitate to the financial, insurance, real estate and administrative sectors. Others open restaurants or other traditional businesses, Wong says.
“It can be challenging for some who have to accept jobs below their skill level.”
But many come with sufficient financial resources to buy a home. “They’re looking in the C$400,000 [HK$3 million] to C$600,000 range. If a family cannot find a suitable home, they may live in a condominium for one or two years before they buy,” Wong says.
Families tend to buy single family homes in middle-class suburban areas with substantial Chinese populations such as Markham, Richmond Hill and Toronto city’s North York district, the eastern side of which is heavily Chinese.
Couples or first-time buyers prefer condominium units, a popular alternative to detached homes. The Greater Toronto Area (GTA) has about 255,000 condominium units, with a record 35,000 to 40,000 more under construction. North York also features a large number of condominium units close to the subway line.
Because of land constraints and a rapidly growing population within the Greater Toronto Area, more developers are leaning towards high-density development, such as condominiums. The GTA’s population grew by a million people over the past 10 years to about seven million. Like other cities around the world, Toronto has been hurt by the global financial crisis. Home sales began declining in June 2008 and hit bottom in January last year before starting to pick up in the spring.
Home prices fell about 10 per cent during the period.
Faced with a lacklustre real estate market in March, developer Concord Adex dangled a 20 per cent cash credit at the final closing for the first 20 units sold at its new 28-storey Panorama brick-and-glass waterfront condominium project in downtown Toronto.
“It created quite a buzz,” according to a company employee, who adds that all 20 units sold within an hour. Occupancy at the project, where units range in price from C$250,000 to C$1.5 million, is projected for completion by the middle of this year. The 20 units sold were in the mid-price range of C$350,000 to C$400,000.
The GTA’s housing market began to rebound in the second half of last year. Sales more than doubled year on year in November, with the average price for transactions up 14 per cent to C$418,460, according to the Toronto Real Estate Board.
Despite an unemployment rate in Toronto of 9.7 per cent, pent-up demand and low mortgage interest rates - less than 4 per cent for a five-year fixed rate mortgage - have lured many back into the market, particularly first-time buyers.
GTA home prices have risen 15 per cent to 20 per cent in the past six months and are now higher than their pre-crisis levels, says Shaun Hildebrand, an analyst for the Canada Mortgage and Housing Corp.
“But that isn’t sustainable, so we should see prices flattening next year,” Hildebrand says, adding that normal price appreciation is about 6 per cent a year.
A middle- to upper-middle-class community, Richmond Hill boasts annual average household incomes above C$100,000. “The homes are bigger and more modern - about 2,500 to 3,500 sqft,” says Simpson Lee, a manager/broker at Home Life New World Realty.
Ethnic Chinese make up 21.4 per cent of Richmond Hill’s population, according to 2006 census statistics. Lee says a four-bedroom 2,500 sqft single family home with a two-car garage ranges from C$550,000 to C$650,000.
Ideally suited for commuters, Markham is home to many hi-tech companies, with more than 1,000 technology firms along the border between Richmond Hill and Markham. The Canadian head offices of IBM, Motorola, Toshiba, Apple, American Express are among others are in Markham.
Chinese are the largest ethnic group in Markham, which also attracts many immigrants from East Asia, South Asia and Europe. A typical three bedroom 2,000 sqft home in Markham sells for C$450,000 to C$550,000, Lee says.
North York has 1,800 sqft homes with three to four bedrooms and two baths and has a wide price spectrum, from C$585,000 to C$1.6 million.
Prices for existing condominium units range from C$400 per square foot in North York and Markham to C$1,200 per square foot for new top-end luxury units.
The rental market has remained stable, with rates hovering at C$2 to $2.50 per square foot. Rent increases in Toronto are limited by rent control restrictions.
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