CANADA’S URBAN ENCLAVES APPRECIATE MORE THAN SUBURBAN SURROUNDINGS OVER 10-YEAR PERIOD; HOWEVER, PRICES IN BOTH AREAS DOUBLE
A mature house near the subway or a new home with a big yard; both have big gains
TORONTO, June 3, 2008 – When it comes to laying down roots, the proverbial debate of ‘the city versus the suburbs’ is likely to get a little more heated, as the majority of house prices in both Canada’s major urban and suburban neighbourhoods were found to have nearly doubled over the past 10 years, with urban dwellings appreciating slightly more than their suburban counterparts, according to the Urban vs. Suburban Survey released today by Royal LePage Real Estate Services. The country’s most impressive gains were seen in Edmonton where condominiums in both urban and suburban areas more than tripled and quadrupled in price,respectively.
Of the thirty-two urban and twenty-six suburban markets examined across Canada, the national average price of a standard two-storey home in an urban neighbourhood appreciated by 129.2 per cent to $522,999, over the past decade; while the same property type in the suburbs
appreciated by 110.1 per cent to $334,380. The national average price of a bungalow in urban Canada appreciated by 122.3 per cent to $371,059, while its suburban counterpart rose by 115.2 per cent to $318,346, over the past 10 years. The last decade saw the national average price of an urban condominium increase by 131.5 per cent to $284,312, while the same property in the suburbs pressured upwards by 103.7 per cent to $212,323.
“A look back at the last 10 years in Canadian real estate growth reveals that typically, home prices in urban markets have grown faster than those in the suburbs, with both areas showing impressive appreciation,” said Phil Soper, president and chief executive, Royal LePage Real Estate Services. “This decade has provided Canadians with the historically longest housing market expansionary cycle in the nation’s history. It is no surprise that house prices have increased as much as they have; strong demand for amenities and limited supply in city centres have spiked prices upwards in urban areas, while affordability and spacious yards continue to attract buyers to the suburbs. It really comes down to a lifestyle choice.”
The study revealed that house price appreciation patterns differed significantly from city to city, and across different housing types. Some cities saw their surrounding suburbs appreciate more than urban properties, and others experienced a reversed pattern. Factors driving price increases in the country’s urban neighbourhoods generally included limited property availability, a desire to be near the workplace, diverse amenities and more recently, the rising cost of fuel – which, when combined, have heightened buyer interest in these city-core areas.
Suburban price appreciation has mostly stemmed from the relative affordability of areas that are removed from the city core. The availability of affordable, larger properties with garages and more green space also appeal to buyers. Increases in the cost of doing business in commercial downtown areas have seen more corporate offices moving outside of urban areas, where many buyers are realizing that their workplace can be only minutes away from home in the suburbs.
It was the cities that have recently experienced huge levels of in-migration, as well as cities that were historically the most affordable, that have seen the highest price increases. Added Soper: “Looking forward to the next 10 years, it’s likely that the great debate of city dwelling versus suburbia will continue. Regardless of if your home address is in the middle of an urban metropolis, or you hang your hat many kilometres from the city centre, real estate proves to be a solid long-term investment.”
The survey found that Toronto’s urban detached bungalows and standard two-storey homes appreciated more than their suburban counterparts. Soaring prices in urban areas can largely be attributed to the limited supply and increase in demand to be closer to amenities such as work, transit and restaurants. Despite trailing slightly behind their urban counterparts in house prices, suburban areas have seen a greater appreciation in condominium prices, which may be largely due to maturing baby boomers looking to downsize their empty nests to something that requires less maintenance.