HOUSE PRICES IN CANADA BOOM IN THE SUBURBS

New research shows house prices in Canada's suburbs grew faster than in downtown areas during the pandemic as remote work spurred a preference for bigger homes.

The Bank of Canada said in a study that the closure of many downtown services coupled with a desire for more living space increased demand for homes in suburban areas.

This shiō weakened the so-called proximity premium typically associated with homes in more urban areas, which tend to be more expensive due to scarcer land, shorter commutes and be?er access to services, the central bank said.

The research shows that while house prices increased strongly in most neighbourhoods during the pandemic, the growth was strongest in the suburbs.

As a result, the bank said that the real estate price gap between Canada’s suburbs and downtown areas already narrowing steadily pre-pandemic shrank considerably.

In 2016, for example, suburban homes in Canada typically sold for 33% less than those in the downtown core, according to the bank's study. In 2019, they were selling for 26% less as the gap narrowed.

If the same trend continued, 2021 houses in the suburbs were expected to sell for about 21% less than in downtown areas.

But instead, houses in the suburbs sold for about 10% less than in downtown areas, a significant reduction in the price gap between the suburbs and downtown areas, the bank said.