If you’ve been looking at buying property in Canada lately, some of the numbers might be shocking. Some investors are wondering if a property is cheaper in Canada. A recent Canadian report noted a 31.6% increase in average sales prices over last year.
Before you panic, you should know that Canada’s major centers drive much of that property data. Yet, there are still many places across the country where a good property appraiser can find a deal.
So if you still want to look North for some property deals, keep reading. There are a few things you will need to know to enter the Canadian real estate market.
Laws Have Changed
New rules for foreign investment have changed recently because of rising prices. For example, the government of British Columbia was the first to impose a Foreign Buyers Tax. As a result, American and other foreign investors can expect to pay 15% more on the sale price.
Lower interest rates and a reduced supply have caused Canadians to close down some loopholes. So in Vancouver, a house that sells for CDN$919,000 will cost you an extra CDN$137,000 or US$102,000 to buy.
Canada has also changed rules for qualifying to buy a property. First-time buyers must meet a stress test to get a qualified mortgage. Again, lower interest rates have been the catalyst for implementing these new rules.
To get a mortgage from a Canadian bank, buyers need significant downpayments first. So if you are looking at rental properties, you need to make sure you have funds upfront. Different tax laws apply as well, so see more here for details.
Big City Big Price
Toronto and Vancouver have become more expensive than most American cities for a property. The average price for a home is $967,885 in Toronto, increasing 15% year over year. In Vancouver, prices have increased 11% to $1,089,096.
Also, both cities attract more buyers to outer regions. For example, the Fraser Valley region of B.C. has risen 26% to $944,996. So the best place to look is further away.
Even centers surrounding the city of Toronto have increased at a similar pace. Kitchener/Waterloo and the Niagara Region have unique draws for buyers. So prices are more affordable for property management investing in smaller cities.
Canadians are aware that some buyers are looking for rental properties. As such, the buyers don’t intend to live in those homes. And with a supply shortage, these investments have made it harder for residents to find homes.
And like the United States, immigration is a critical factor for the growing demand. As a result, those thinking I will find property for sale near me is no longer an option for many.
Buyers get forced into bidding wars on houses they want to buy. As a result, the chain effect has inflated the price of many homes. Yet, the shortage has helped other cities see population growth.
Where to Find Affordable Property
For those willing to look at other areas, several regions offer significant bargains. For example, outside of Toronto, there are two centers in Ontario below the price average. Sudbury and London/St. Thomas is two cities within a few hours’ drive.
Both areas of Ontario have grown in population over the past years. Better work and living opportunities are producing an increase in available rental properties. Thunder Bay property is around $238,000, yet still a 15% increase.
Of course, the increase means there is more interest in these places. And Ottawa has increased 26% to an average house price of $591,413.
The sharpest increase of late has been in Windsor, across the river from Detroit, Michigan. The average home price rose a massive 31% to $492,480 last year. However, there is a better picture in other parts of Canada that some folks don’t know.
B.C. and the Prairies
British Columbia’s interior has small centers, but there are better options further East. In Alberta, property prices have gone up, but not as sharply.
Calgary’s average price is $518,237, and Edmonton is still at $375,874.
In Saskatchewan and Manitoba, you can still buy a property for under $350,000. For example, a house in Winnipeg is about $320,000.
Quebec Property Prices
If you have an understanding of French language culture, options exist in Quebec. However, Montreal’s average prices are still around $516,000, and Quebec City is $313,000.
French towns like Sherbrooke and Saguenay sell for $317,000 and $206,000, respectively. Gatineau is close to Ottawa and has an average price of $338,000. But be aware that Quebec has laws that differ from other Canadian provinces.
The East Coast of Canada is as picturesque as it is affordable. As well, the tourism industry thrives in the Maritime provinces. So there are areas for excellent rental properties.
City living is also cheaper, where property appraisal in Halifax averages $433,000. A 3-bedroom house in St. John, New Brunswick, is $199,000.
If you are looking at rental properties, you will want to know what to expect in return. Recent property data shows that the average monthly rental in Toronto is $2,270.
In Vancouver, similar rental properties go for $2,080. Montreal rentals average $1,500 per month. So in all these cities, house rental values have increased substantially.
Is Property Cheaper in Canada?
As you can see, there are two answers to that question. First, large cities in Canada continue to show price increases. For example, Toronto and Vancouver are now among the most expensive cities in the world to buy property.
Yet, if you are willing to look further out, there are still some great deals. And better yet, a property appraiser will tell you that those prices are increasing as well. So as an investment for property management or to live yourself, Canada has a lot to offer.
All it takes is a closer look. And if you liked what you saw in this guide, check out some more great real estate tips right here.