An influx of capital from Asia is partly responsible for soaring housing prices in Vancouver and Toronto, Justin Trudeau has said, as a new study showed more than 90% of all detached homes in Vancouver are now worth more than C$1m ($772,141).

“We know that there is an awful lot of capital that left Asia in the past few years,” Canada’s prime minister told public broadcaster CBC on Friday.



“Obviously overseas money coming in is playing a role” in Canada’s housing affordability crisis, he said.

Trudeau provided no supporting data on Friday to back up his remarks, although his government set aside funds to study the widespread perception that overseas investors and speculators are to blame for Canada’s housing bubble.

Concern over the overheated property market has focused on Vancouver, where the proportion of million-dollar homes in the city has climbed this year to 91%.

The figure marks a leap from two years ago, when around 59% of houses were worth a million or more, according to the study by Andy Yan, acting director of Simon Fraser University’s City Program.

“This shows how what used to be the earnest product of a lifetime of local work is perhaps quickly becoming a leveraged and luxurious global commodity,” Yan said.



The median household income in Vancouver, meanwhile, rose just 8.6% between 2009 to 2013, according to the most recent data from Statistics Canada. Adjusted for inflation, it would be about C$77,000 a year in 2016.

That puts typical incomes well below the threshold needed to purchase million-dollar homes, said Yan, noting other factors must be driving the sharp increase in home values in Vancouver.

“It’s global cash, meeting cheap money, meeting limited supply,” he said, adding that all three factors are working to “magnify each other” and drive further speculation.

Canada’s central bank governor and the Organization for Economic Cooperation and Development (OECD) both expressed concerns this month about the housing situation.



Previous administrations have on five occasions since 2008 tried to tighten mortgage lending rules in order to cool heady real estate activity, but those measures failed.

“We are all hoping to stabilize the market,” Trudeau said, noting that any federal move requires delicate balancing – curbing price increases while not devaluing existing equity in people’s homes, especially in markets that are not overheated.

New construction and resale activity continue to grow strongly in Vancouver and Toronto, while Alberta and other resources-producing regions are seeing price and sales declines. Other markets have seen little or no price growth.



“There is little debate that Canada’s hottest housing markets are ripe for a correction; the difficulty is predicting its timing,” said the Toronto Dominion Bank report.