Canada’s economic prosperity since 2008 sets it apart from most other North Atlantic economies. Canada’s avoidance of the financial crisis that beset its neighbours so severely, both to the south and across the Atlantic, has meant its real estate markets have taken a very different path to those of the US and Europe.

Apart from a brief hiatus in 2008, Canada’s housing markets are almost unique among industrialised countries in having grown at a similar rate as their pre-crisis trajectory.

This means that the Canadian residential market stands in deep contrast to that of the US. Capital values are at an historical high and yields are relatively suppressed in cities where demand has been high from overseas investors.

This leaves few buying opportunities for those seeking distressed sales and high future price growth in urban properties. Having said this, economic growth has fuelled rental growth too, so there are still some cities where high yields look compelling to overseas buyers.

Outside of the major conurbations, there are still some opportunities for bargain-hunting and capital growth. Leisure resorts in Canada are still relatively low priced and potentially high-yielding. As American and European economies recover, the potential for renewed second home purchasing will increase and a scarcity of supply should lead to price growth.

We expect the first wave of overseas investment to be in established resorts like Whistler but anticipate that there is also scope for further leisure-market development in places like Nova Scotia. Here, both coastal and inland recreation is poised to capture a prosperous domestic second home market and to attract new, US holiday makers and buyers. The prospects for both income returns and growth have the potential to attract an even wider-spread of buyers from Europe, Asia and beyond.

Taken from
Spotlight: Canada Residential Market - Spring 2014