For the investor or resident, Canada’s financial centre has much to offer besides its well-documented green spaces, crystal-clear lakes, world-class restaurants and shopping. Few major cities provide such a wide range of property price points. Whether you are looking for a pied-a-terre or 10,000ft2 of detached grandeur, Toronto has something to fit your needs and your budget.

Something for everyone
Downtown condominiums start at $200,000 (CAD) for studios, and can go as high as $15-20m for spacious penthouses in one of the new luxury developments by Ritz Carlton, Trump, Shangri-La or Four Seasons. Centrally-located, detached homes are available in the $450,000-$15m price range.

Toronto is known for its diverse neighbourhoods, and fortunately, these invite easy comparisons versus their UK equivalents. The symmetrical perfection of Yorkville’s streets and the cosmopolitan vibe of this area’s international boutiques and gourmet restaurants easily bring to mind the Victorian terraces and luxury-brand shops of Knightsbridge. Just a few blocks east, the tended gardens and stately homes in one of Toronto’s most established and prestigious neighbourhoods, Rosedale, are reminiscent of Holland Park’s imposing residences. The village of Queen West, a 20 minute walk from Toronto’s financial district, compares to the specialty shops and bohemian ambiance of Notting Hill. Likewise, the quirky denizens of Kensington Market could easily fit alongside the residents of Camden in north London. Toronto broker Victor Martin Real Estate Ltd. provides a very useful guide to compare Toronto vs. London neighbourhoods at www.victormartin.ca

UK investors are drawn to Toronto because of its proximity to London (flight times Toronto to London average seven hours), its low vacancy rates (less than two percent for rented purpose-built apartments as of end 2010), and average gross yields of between five and six percent for most downtown condos.

Condos are a popular choice for both investors and owner-occupiers. During the third quarter of 2010, condo sales outperformed sales of detached houses – in central Toronto, 60 percent of residential sales are condominiums. Between 2009 and 2010, buyers of certain downtown condos enjoyed price gains of 20-30 percent. These units still remain affordable by international standards: CAD$700 per sq ft in the downtown core, CAD$600 in downtown west and CAD$500 in downtown east. The most popular choice for renters is a one plus one (one bedroom plus study or den) with parking.

Post-recession rally
Although 90 percent of Canadians live within 100 miles of the US border, Canada’s housing market is very distinct from its American neighbours’. Average Canadian house prices are now five percent higher than the 2007 pre-recession peak, whereas prices in the US are still 28 percent lower. Over five percent of US households are in foreclosure, while 80 percent of Canadian homeowners have more than 20 percent equity in their homes. Of the 400,000 Canadian jobs lost in the recession, all have been recovered. In the US, only 15 percent of lost jobs have been recouped. Also worth noting is that Canadian domestic demand is outpacing the US by 20 percent. Bank of Canada Governor Mark Carney sums it up: “We’ve recovered the jobs, we’ve recovered the lost output, and we are doing better than virtually anybody else in the advanced world.”

Affordability and relatively low leverage are key factors. Canada’s banks did not participate in offering liar loans to sub-prime mortgagers. As a result, Toronto property prices dipped only eight to 12 percent at the trough of the recession and quickly recovered. The Canadian Association of Accredited Mortgage Professionals’ latest report shows that the vast majority of Canadian holders of residential mortgages can easily afford higher monthly payments. Canadians are financially conservative; hence the five year fixed rate (currently 3.5 percent) is still the most popular mortgage product, despite the more attractive variable rates on offer.

Immigration continues to be a major force driving Toronto property prices higher. Immigration figures are the highest in four decades – Canada welcomed 250,000 newcomers in 2010, half of whom settled in Toronto. While the Toronto condo market is the most active in North America, new developments have been struggling to keep pace with demand, and sales-to-inventory ratios are once more on the rise.

Outlook for 2011
Both the OECD and the BOC are predicting GDP growth of three percent for Canada in 2011. Canadian interest rates, as is currently the case with most developed countries, are historically low. The US Federal Reserve has declared that US rates will remain extremely low for an extended period. This should hold true for Canadian rates as well – any hint that rates in Canada will rise independent of the US would strengthen the Canadian dollar and negatively impact Canadian manufacturing.

So Canada is, in theory, left with a growing economy and artificially low interest rates. In this environment, prices of hard assets, such as property, should benefit. Clearly, this possibility has not been overlooked by international buyers. Participation by overseas investors in Toronto new-builds is often as high as 50 percent.=

Contact
Louisa Martin, of Victor Martin Real Estate Ltd. is dedicated to helping overseas buyers invest in or relocate to the Toronto area. Previously, she worked in bond trading and sales in London for Citigroup, ABN AMRO, Societe Generale and Daiwa SMBC.

Web: www.victormartin.ca
Email: louisa.martin@victormartin.ca

Facts and figures
• Toronto is a 1.5 hour flight from New York City
• Canada has 20 percent of the world’s supply of fresh water
• Summer temperatures in Toronto routinely hit 30oC
• The Toronto islands are the largest carbon-free space in North America
• Toronto’s beaches and island airport are 10 minutes from the financial district