property investments in canada

Canada made a name as a model middle power, with a strong focus on peacekeeping. As a result, the country is a top destination for tourists and investors. Property investors consider Canada as a new frontier in the real estate market. Property investments in Canada for foreigners is easy and profitable once they understand the current Canadian tax laws. 

One of the reasons foreign investors put their money in Canada real estate market is the absence of residency or citizenship requirements for owning and buying. Anyone can live in a Canadian home temporarily. Those who wish to stay in Canada for a longer time must fulfill immigration requirements. Non-Canadian residents do not have limitations in owning a rental property in Canada. They must, however, file annual tax returns with the Canada Revenue Agency (CRA). 

Canada Economic Status

Canada’s recent economic indicators are positive, positioning itself for continued moderate growth this 2019 until 2020. Among the G7 economies, Canada remains the fastest-growing, despite a slight plunge in the early months following slowed consumer spending and subdued global growth. 

This past performance will have a direct effect on Canada’s economic growth, slowing it to only 1.4% before it will accelerate to 1.7% come 2020. 

Based on the 2018 Economic Freedom of the World Report, Canada ranks 10th in the all-government index. Alberta, previously occupying the top position slipped to 6th place at 7.99 as a result of significant changes in taxation, spending, and regulation.

Despite these, Canada still attracts huge investments due to its Corruption Perceptions Index ranking. According to Transparency International, Canada ranks 9th in the least corrupt nation out of 180 countries. 

Liveability in Canada

Canada is a livable city. In fact, many Americans consider immigrating to Canada should there be a need to. Additionally, Canadians love their country. This is evident in the latest RE/MAX survey conducted by Leger. The survey revealed that as much as 89% of Canadians are willing to recommend their neighbourhood to others. 

Six out of 10 Canadians express ease of access to shopping, dining, and green spaces as top liveability criteria. Many also laud the proximity of public transport, work, school, and community centres. 

In the global liveability ranking done by the Economist Intelligence Unit, three Canadian cities made it to the top 10. Calgary took fourth place, while Vancouver and Toronto ranked sixth and seventh, respectively. Calgary received perfect scores in almost all categories except for culture and environment. Vancouver got a score 95 in stability and 92.9 in infrastructure whereas Toronto scored 97.2 in culture and environment but only 89.3 in infrastructure. Property investment in Canada must include consideration of the country’s cost of living. Household expenses in Canada can be as much as half of the net salary. For instance, Ontario has an average household expense of CAN$88,953 annually. 

Property Investments in Canada

Canada’s property market is cooling down. The confluence of tighter monetary policies along with financial stability measures caused mortgage financing unaffordable to most property buyers. Due to this, there is a notable decline in residential mortgage credit growth to only 3.1%. Additionally, new mortgages fell sharply among highly indebted borrowers. 

House prices are down by 2.5% compared with figures from 2018. The dip in house prices in Hamilton, Vancouver, and Toronto reduced speculative bubbles although house prices in these areas remain overvalued. 

In general, existing policies that reinforce financial stability is enough to contain housing-related risks. So, this is a much-needed cool down for Canada housing market as this will result in housing prices stabilizing, particularly in Vancouver and Toronto.  

The International Monetary Fund (IMF) noted that the Canadian economy will suffer if this housing market imbalance remains unsolved. If this sharp declines in housing market prices are coupled with unemployment and reduction in consumer spending, it could be enough to ignite financial stability risks and further slow economic growth. 

Property Market Trends in Canada

Canada must surpass uncertainties in the market to respond to current changes. While Vancouver and Toronto remain the leading Canadian cities in terms of real estate investment prospects, several cities in the country also offer opportunities. The top 10 markets to watch in Canada include: 

Toronto
Vancouver
Montreal
Ottawa
Quebec City
Winnipeg
Saskatoon
Halifax
Edmonton
Calgary

Single-family residential properties in Canada are receiving positive demands but faces the challenge of tight supply, particularly in major areas in Toronto and Vancouver. As a result, affordability remains a major concern for most buyers. 

Condominiums in Canada are yet to feel the effects of tougher mortgage rules and rising interest rates. As a result, condos are still in demand. The main concern here is the number of new constructions in major areas. 

Purpose-built rentals are gaining ground. In the past years, construction of purpose-built rental properties tripled in number. Quality is at par with housing stock construction for ownership. 

Co-working spaces are also invading the Canadian market. Office rentals are now leaning towards these shared spaces. Research by JLL Research revealed that co-working spaces will comprise as much as 30% of corporate real estate portfolios by 2030. 

Industrial spaces for distribution and return centres are also on the rise as a result of the growing popularity of online retail. Other growing industries needing huge industrial spaces include cryptocurrency mining and cannabis production facilities. 

CHG Recommendation: Take Advantage of Current Low Housing Prices in Canada

CHG recommends foreign investors to take advantage of the current low housing prices in Canada. The best property investment in Canada is with rental properties. Most developers are looking to make money with rentals as tighter mortgage policies are restricting borrowers from purchasing new homes. This results in more people looking for rental homes. 

One of the advantages of property investment in Canada for foreigners is the availability of loans from foreign banks, not just from Canadian banks. Most foreign banks would charge low-interest rates saving foreign investors thousands of dollars compared with investing in their home country. 

Furthermore, Canada offers tax deductions for property investments in Canada. Any interest paid on loaned money for real estate is deductible if used for income-generating purposes.

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