Toronto Condo Market is the World's Most Overvalued as Per the Economist

Toronto’s housing market is still among the frothiest in the world, more than a year after the federal government moved to head off a bursting bubble, findings by The Economist suggest.


 In results posted online over the long weekend, the magazine looked at how homes are overvalued or undervalued based on two measures: Price-to-rent and price-to-disposable income. Where the first measure is concerned,

The Economist found Toronto prices to be hugely overvalued. Hong Kong was the highest city in the ranking, with a population similar to that of Toronto, but with higher home density and higher pricing, Wellington, New Zealand ranked third behind Toronto Market, and the rest weren’t even in shooting distance.

 “On this basis, Toronto’s house prices are bubbly whereas Tokyo’s are undeservedly flat,” the magazine said. On the second measure, Toronto ranked just behind Paris, France, while there was no comparison to Hong Kong.

 The latest findings for Toronto are just slightly better than those of last year,
presumably the result of Finance Minister Jim Flaherty’s new mortgage restrictions just over a year ago. Toronto house prices,
The Economist said, climbed 1.9 per cent in the first quarter of the year from a year earlier, a slower pace than the 5 per cent in the same quarter of 2012.