Real estate prices in the Hamilton area have jumped by 70 per cent over the past five years largely because of the westward exodus of Greater Toronto Area buyers competing for a limited supply of homes, according to the Canadian Real Estate Association.

A new CREA report says the price increase in the Hamilton-Burlington market — with the average home costing $581,900 — is the fourth highest in Canada.

And the spike was even greater in Niagara Region, with a whopping 79 per cent rise over the same period, although the average cost of a home there — $393,500 — is almost $200,000 less than in Hamilton.

“Niagara was a little late to the party, but certainly they have experienced similar price growth to other markets in the Golden Horseshoe region,” said Greg Klump, CREA’s chief economist.

The price jumps in Hamilton-Burlington and Niagara Region are especially interesting when considering the GTA saw an increase of only 58.5 per cent over the same period and the national average was 43 per cent.

British Columbia’s Fraser Valley experienced the highest increase at 86 per cent, caused from spillover from the Vancouver market. The Lower Mainland (Vancouver and the surrounding region) came in second with 74.5 per cent.

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Klump said federal government changes to mortgage rules over the past year, including a stress test for applicants, and rising interest rates mean a lot of GTA buyers have hit a ceiling on what they can afford to finance.

“In order to qualify for financing, they have to look for a more affordable home, which usually means driving till they qualify,” he said.

While markets in both Toronto and Hamilton have simmered in recent months, prices remain relatively high because of previous price spikes, especially in 2017.

“In the spring of 2017, things went bananas, just before the Ontario Fair Housing Plan was announced by the (former Kathleen) Wynne government. That was what pushed those price levels up,” Klump said.

“They have come down from that lofty level, but more recently they have been on the rebound and heading back that way.”

Klump said Hamilton’s market has been tighter than Toronto’s when it comes to supply versus demand, and “when you get a tight market, you get price increases.”

The Realtors Association of Hamilton-Burlington recently reported a 5.2 per cent increase in prices for single-family properties in November compared to the same month last year. Sales declined by 17.5 per cent during that time.

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But Anthony Passarelli, a senior market analyst for Canada Mortgage and Housing Corp., predicts that sales will rebound in the new year and post an increase in 2019 of 11 to 18 per cent, with an average price rise of four to 10 per cent.

He agreed that GTA buyers have had a profound effect on prices in Hamilton and Burlington.

Specific figures about the numbers of buyers from the GTA are not available because purchase agreements don’t contain a buyer’s former address.

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