A new global real estate report suggests that real estate in Canadian metros Vancouver and Toronto is finally out of the bubble risk.Published Wednesday, the annual UBS Global Real Estate Bubble Index discusses deflating real estate bubbles worldwide.
Only two cities in UBS’s watchlist remained in the bubble risk category this year — Zurich and Tokyo — down from nine spots in 2022. Thankfully, no Canadian cities made the cut. “Between mid-2019 and mid-2022, real prices in Vancouver increased by 25% and by almost 35% in Toronto, while household leverage rose at a fast pace,” reads the report. It also notes that since mid-2022, the real estate markets in these cities have moved closer to balancing, removing Vancouver and Toronto from the bubble risk category to the “overvalued” category.
“A mix of increasing financing costs and higher mortgage stress test rates tipped the scales, and prices in Vancouver and Toronto have corrected by more than 10% in inflation-adjusted terms since mid-2022,” UBS researchers said. “But demand for living space in these cities is rising steadily, and the pressure is shifting to the rental market.”