These cities are immigration destinations, a large number of Canada’s > 300k annual immigrants becomes residents of these cities every year. These immigrants are educated and quite often asset owners in their own countries. So lots of foreign money flows to these cities through immigrant population. Also culturally immigrants invest more in real estate as countries they have come from don’t have great investment alternatives beside real estate.
Because interests rates have been falling for last 20 years property prices have increased tremendously. This has created tremendous wealth for property owners, who then learned that they can cheaply get money out through home equity line of credit. This money is then invested in other properties which are rented out to pay for mortgage and expenses, creating a loop which further expands the price growth.
At this point property owners are making more money just by living or holding their properties than by working. So its becoming extremely attractive form of investment.
All of this is propped up by lax regulation, low housing starts, green belts, few public housing options. It is a dire situation and now young people are getting frustrated. Because the wages haven’t kept up and savings have been inflated away by a government which loves to print money.
Now this not even a big city phenomenon, the leverage available has caused prices in small cities to rise tremendously as well. Young local population is getting priced out because numbered companies are hoarding up houses and making them rentals.
There are some solutions, like banning non residents to own residential property in Canada. Asking for over 50% downpayment for 2nd residential property, 75% on 3rd. Taxing vacant properties.
In the end government needs to realize that residential properties are social assets not financial assets. The goal should be to create vibrant communities, and that cannot be done if people are unable to own a residence.