For every 1 per cent increase in Toronto-area home prices, Hamilton sees a 1.4 per cent increase.
That’s according to a new analysis released Tuesday morning by economists at the Canadian Mortgage and Housing Corporation.
Their report analyzed the rising home prices in the Greater Toronto Area and found that the increase since the recession in 2008 has been the steepest climb in 20 years. GTA prices are out of balance with the underlying economy – in other words, what people earn compared to what houses cost.
Those rising prices in the GTA have a “spillover effect” on nearby cities, with Hamilton seeing the biggest impact, CMHC said.
And so if GTA prices rise 10 per cent in one quarter, CMHC analysts would expect to see Hamilton prices rise 14 per cent in response in the year following that.
On the other hand, according to the report, if prices dropped 10 per cent in Toronto, Hamilton prices could see a decline of 14 per cent.
The price of a house in Hamilton compared to a price in Toronto has remained fairly constant over time, but other nearby cities haven’t risen quite as quickly, CMHC said.
St. Catharines and Niagara have experienced some of that spillover, too, which the CMHC analysts described as being driven by buyers not willing to buy into multi-unit buildings in Toronto and searching further afield for single-family detached houses.
Article originally appeared at cbc.ca