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Canada’s housing market showed the largest increase in the world over the last 25 years, a new report shows, with realtor commissions growing equally as fast.
The report provided by Bode, an online do-it-yourself (DIY) platform where buyers and sellers can transact without a realtor, highlighted recent Bloomberg data finding Canada had the largest percentage price increase among developed nations over that span, increasing by 553 per cent.
Australia had the second highest increase at 502 per cent, followed by New Zealand at 451 per cent.
The United States, in contrast, saw a jump of 192 per cent in the 13th spot, while Japan was at the bottom of the list of 20 nations, seeing its home prices fall 31 per cent.
Yet the Bode report noted that realtor commissions in Canada have increased commensurately over that span, accounting on average for about five per cent of purchase price.
“It’s interesting to note that over the past 25 years, Canada has had the largest price growth of any global developed economy, yet we have amongst the highest real estate commissions,” says Michelle Schurman, Bode spokesperson.
She further points out that a home worth $200,000 in 1997 resulted in about $10,000 in commissions — based on the five per cent rate. Yet today the same home would presumably be worth $1.1 million, based on Canada’s price index growth. In turn, the same commission would be worth more than $45,000.
Schurman further argues realtors’ value offering “hasn’t fundamentally evolved” in the last 25 years, resulting in more buyers and sellers seeking alternative, online DIY platforms to buy and sell their homes.