CLOSE X

Register - if you don't have an account

Yes! Sign me up for Global Property Guide's fortnightly email newsletter.


Login - for registered users

Forgot Password?
Explore destinations
continent map couldn't be loaded Pacific Europe & Russia North America Latin America Asia Africa Middle East Caribbean

 


Financial Overview

Directory

Property Search

Global Statistics

Regional Statistics






Last Updated: Apr 02, 2017




Canada’s housing market continues to grow stronger, despite repeated market-cooling measures and fragile economy.

House prices in Canada’s eleven major cities soared 13.37% during the year to February 2017 (11.03% inflation-adjusted), up from 6.49% y-o-y growth during the same period last year, based on figures from Teranet – National Bank of Canada.

This is the highest rate of annual house price rises in more than a decade.

The central bank has taken action repeatedly–from raisingmortgage downpayment requirements to reducing amortization periods–but house prices still spiral up as if nothing could stop them. Serious people who understand these things have been issuing dire warnings. The Canada Mortgage and Housing Corporation (CMHC) recently made clear that overvaluation and price acceleration were causing stresses in the housing market.

“We continue to detect strong evidence of problematic conditions in Canada,” said CMHC chief economist Bob Dugan. “Price acceleration in Vancouver, Victoria, Toronto and Hamilton indicates that home price growth may be driven by speculation as it is outpacing what economic fundamentals like migration, employment and income can support,” Dugan added.

According to the Canadian Real Estate Association (CREA):
  • The average price of a two-storey single family home posted the strongest year-on-year gains of 17.9% in February 2017.
  • Townhouses / row houses prices also increased by 16% in February 2017 from a year earlier.
  • The national average price of a one-storey single family home rose by 15% during the year to February 2017.
  • Apartment prices increased by 13.7%, on average, over the same period.

The national average home price stood at CA$519,521 (US$387,719) in February 2017, up 3.5% from the previous year, according to CREA. The figure is pushed up by Greater Vancouver and Greater Toronto, Canada’s most active and expensive housing markets, and when these two are excluded the annual average price is reduced by around CA$150,000 (US$111,945) to CA$369,728 (US$275,928).

There have been big regional variations:
  • Tight housing supply in Greater Toronto Area (GTA) and Greater Vancouver, plus low interest rates, have pushed their house prices upward
  • The recent oil price slump has hit oil-producing areas such as Calgary, dragging house prices down

“In and around Toronto, many potential move-up buyers find themselves outbid in multiple-offer situations amid a short supply of listings,” said CREA Chief Economist Gregory Klump.“By contrast, housing markets in urban markets elsewhere in Canada are either balanced or are amply supplied.”

“Because housing market conditions vary by region, further tightening of mortgage regulations aimed at cooling the housing market in one region may destabilize it elsewhere,”Klump added.

Of Canada’s eleven major cities, there were house price rises in eight during the year to February 2017.
  • Toronto’s house prices recorded the biggest year-on-year rise of 23%, followed by Hamilton (19.7%), Victoria (15.9%), and Vancouver (14.3%).
  • House prices increased less in Ottawa (5.3%), Montreal (3.9%), Halifax (2.6%), Winnipeg (1.7%), and Calgary (1%).
  • House prices fell in Quebec (-1.8%) and Edmonton (-0.1%).

Home sales in Canada increased 6.5% to 534,709 units in 2016, according to CREA. Ontario and British Columbia accounted for about two-thirds of total transactions.

Canada house pricesCanada’s economy expanded by 1.4% in 2016, after growth of 0.9% in 2015, 2.5% in 2014, 2.2% in 2013, 1.7% in 2012, and 3.1% in both 2010 and 2011, according to Statistics Canada.

The economy is expected to grow by 2.4% this year, supported by fiscal initiatives, export market growth, and commodity-related investment, according to the Organisation for Economic Co-operation and Development (OECD).

Analysis of Canada Residential Property Market »


RENTAL YIELDS
Last Updated: Jan 27, 2017



Rental returns on apartments in Montreal tend to outpace those in Toronto. We've found in recent years that even on a largish 120 sq. m. apartment in Montreal, you are likely to earn a gross rental return over of 5 %. If you own a small apartment of 60 sq. m. in Montreal and rent it out, you are likely to make a return of around 7%. In this low-return era, in a low-risk country such as Canada, that is a really acceptable, not to say enticing, yield.

In Toronto, gross rental yields are lower, at between 4% to 6%, sometimes even lower. Taking account of the fact that we give gross figures - a guess might be that net yields would be 2% lower - then obviously the difference in returns between Montreal and Toronto is really significant.

If you are looking for rental returns, Montreal is the city that you want.

We continue to find it hard to collect yields figures for Vancouver, and this year we have not managed to get sufficient figures for reliable figures for Montreal. For reasons too complex to explain here, that's because that strange habit, common in the Anglo-Saxon world, of classifying listings per number of rooms rather than by the size of the apartment, makes it really hard for us to present accurate yields figures.

Read Rental Yields  »



TAXES AND COSTS
Last Updated: Jan 18, 2017



Rental Income: Gross rental income is subject to a fixed 25% tax, withheld by the tenant.

However, nonresidents can elect to pay under the section 216 of the Income Tax Act, wherein they will be liable to pay tax on their net income at progressive federal rates. Nonresidents electing under section 216 are also liable to pay 48% surtax.

Capital Gains: Only 50% of the capital gains are liable to tax. Capital gains are computed by deducting the costs incurred in selling and purchasing the property, capital expenditures, and such costs as additions and improvements in the property.

Inheritance: There is no inheritance or estate tax in Canada.

Residents: Canadian residents are subject to Canadian income tax on their worldwide income. Income is taxed at the federal level and at the provincial level.

Read Taxes and Costs  »



BUYING GUIDE
Last Updated: Jan 19, 2017



Total costs and taxes for buying properties amount to around 4.7% to 11% of the value of the property. Transfer Tax differs in each province, ranging from 0.5% to 2%. Typically, real estate agent's commission is 7% on the first CAD100,000(US$88,495) of the sale price and 3% on the remainder, plus 6% Goods and Services Tax (GST). Total roundtrip costs are higher for new and renovated houses because of the additional 6% GST.

Read Buying Guide  »



LANDLORD AND TENANT
Last Updated: Feb 06, 2008



Canadian tenancy institutions are pro-tenant.

Rent: The initial rent can be freely negotiated in all provinces, except in some provinces like Quebec, where initially negotiated rents can be appealed if they are higher than a rent charged by the same landlord for the same apartment within the previous 12 months.

Tenant Security: The contract cannot be terminated by the landlord within the duration of the fixed-term lease (usually one year), except for cause (e.g., tenant's non-payment of rent, tenant conducting illegal activity, and so on).

Subleasing needs a written permission from the landlord but this permission may not be unreasonably withheld. However, the landlord can insist on screening the prospective new tenants and may reject them on the basis of financial risk.

Read Landlord and Tenant  »



ECONOMIC GROWTH
Last Updated: Apr 02, 2017


Budget deficit swells on stimulus spending

Canada gdp inflationCanada’s economy expanded by 1.4% in 2016, after growth of 0.9% in 2015, 2.5% in 2014, 2.2% in 2013, 1.7% in 2012, and 3.1% in both 2010 and 2011, according to Statistics Canada.

The economy is expected to grow by 2.4% this year and by another 2.2% in 2018, according to the Organisation for Economic Co-operation and Development (OECD).

The government has increased spending on infrastructure, cut some taxes, and increased child benefits, among others.

The downside is that budget deficit is now swelling, without any dramatic rise in economic growth. During the first eight months of the 2016-17 fiscal year, the government ran a deficit of CA$12.7 billion (US$9.5 billion), in contrast with a CA$1 billion (US$750 million) surplus recorded over the same period last year.

The deficit is expected to increase further by 24% y-o-y to CA$28.5 billion (US$21.3 billion) in the 2017-18 fiscal year.

The federal government debt is expected to increase to CA$665.5 billion (US$496.7 billion), which is equivalent to 31.6% of GDP this year – still a relatively low level compared to other developed countries.

The country’s annual inflation rate stood at 2.0% in February 2017. This was slightly down from 2.1% the previous month but up from 1.4% in a year earlier.

In February 2017 unemployment fell to 6.6%, its lowest level in more than two years, according to Statistics Canada. British Columbia had the lowest jobless rate of 5.1%, followed by Manitoba (5.8%), Saskatchewan (6%), and Ontario (6.2%). Newfoundland and Labrador had the highest jobless rates, at 14.2%.

In an effort to fill the gap left by retiring baby boomers, Canada liberalized its immigration regulations in 2015. As a result, Canada took in 321,000 immigrants in the 2015-16 fiscal year, the largest number since 1910, according to Statistics Canada.

Last year, Canada’s official population reached 36,286,425, the biggest annual increase since 1988.

“Canada is an aging country, so we are in need of new blood,” says Canadian Immigration Minister John McCallum. “Canadians aren’t having enough babies and so the labour force growth depends very much on the entrance of immigrants.”

The government plans to let in about 300,000 immigrants annually over the next two years.

“Growing Canada’s population through immigration boosts economic growth and softens the economic burden of a rapidly aging population and low birth rates in Canada,” according to a report by the Conference Board of Canada.

The immigrants are expected to reignite the economy - and boost the housing market further.







  • Strong rental market for immigrants
  • Low transaction costs
  • Strong and stable economy
  • No estate or inheritance tax
  • Low to moderate rental income tax
  • Pro-tenant rental laws
RESIDENTIAL PROPERTY FACTS
Price (sq.m): $9,409 For a 120 sq. m. property, usually an apartment.
Rental Yield: 3.98% For a 120 sq. m. property, usually an apartment.
Rent/month: $3,740 For a 120 sq. m. property.
Income Tax: 25.00% Assumptions: Owners are a non-resident couple drawing US$ / €1,500 per month in rent, with no other local income.
Roundtrip Cost: 8.05% The total cost of buying and then reselling an apartment. Includes:

* all transaction taxes and charges:
* lawyers' and notaries' fees
* agents' fees

Assumptions: The buyers are non-resident foreigners. The apartment cost US$250,00 / €250,000.
Cap Gains Tax: 25.00% Assumptions: The property was bought for US$250,000 / €250,000, and sold 10 years later, after a 100% appreciation.
Landlord and Tenant Law: Pro-Tenant Rating is based on a detailed study of each country’s law and practice.

News & Discussion
OCTOBER 2017
SEPTEMBER 2017
SEPTEMBER 2016
JULY 2016
JUNE 2016

More news & discussion »




Free Newsletter

Fortnightly updates from the global property arena directly to your inbox.


Email Address:





Connect to professional advice in Canada





PROPERTY RECOMMENDATIONS

 
Download free property reports from international research houses

Our Newsletter

 
Fortnightly updates from the global property arena directly to your inbox.

Manage subscriptions