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 says in a study released today that the closure of many downtown services coupled with a desire for more living space increased demand and prices for homes in suburban areas during the pandemic.
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The central bank says this shift weakened the so-called proximity premium typically associated with homes in more urban areas, which tend to be more expensive due to scarce land, shorter commutes and better access to services.
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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 says the real estate price gap between Canada’s suburbs and downtown areas, already narrowing steadily pre-pandemic, shrank considerably.
Yet the bank warns that if the preference shift is temporary, house prices in the suburbs could face downward pressure.
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