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.
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.
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.