Foreign Investors to Montreal

Foreign investors could shift focus to Montreal, Saskatoon Real Estate

A new report on real estate trends says foreign investors may start looking beyond Toronto and Vancouver and begin targeting markets in Montreal and Saskatoon in the coming year.

The report by PwC Canada and the Urban Land Institute says both foreign and domestic real estate investment will shift in 2016 from Western Canada, where falling oil prices are hurting growth, to the east, where the low loonie is boosting manufacturing.

Vancouver is the notable exception, rising to first place as the country’s must-watch real estate market. Money is also expected to continue to flow into the Toronto market, the country’s largest.

PwC says Calgary and Edmonton were, until recently, among the most country’s most promising real estate markets. However, as the price of crude has plummeted and investment in the oilpatch has dried up, both residential and commercial properties in the region have stopped switching hands as owners take a wait-and-see approach.

Meanwhile, real estate markets in Ontario and Quebec – home to the bulk of the country’s manufacturing sector – are poised to benefit from the lower loonie as well as the economic recovery in the U.S., Canada’s biggest trading partner.

And that could spark greater interest from foreign buyers in the Montreal market, PwC predicts.

Chris Potter, a partner at PwC Canada, says Saskatoon farmland has also become attractive to foreign investors, although it remains to be seen how much of an impact the oil price shock will have on the province’s real estate market.

“Sometimes people scratch their head about Saskatoon, but over the last several years we’ve seen a lot of interest in Saskatoon, from an agriculture and timber perspective,” Potter told reporters during a roundtable Tuesday.

“Saskatoon has some concerns, because of the ripple effect from the oil and gas industries and the impact that’s coming from Alberta, but there are a lot of other factors … that are helping to contribute to its attractiveness now.”

The report is based on interviews and survey responses from more than 1,400 real estate experts, including developers, brokers, property managers and investors.

PwC says foreign investors are also likely to start snatching up medical clinics and other real estate in the health-care sector, which is expected to benefit from Canada’s large population of aging baby boomers.

Meanwhile, the lack of affordable housing in Toronto and Vancouver threatens to cull the urbanization trend in those regions, as first-time homebuyers move out to the suburbs in search of cheaper properties.

Sky-high prices in certain urban markets are also changing attitudes towards renting, PwC said.

“Renting is no longer seen only as a temporary step on the road to homeownership, but as an alternative,” the report reads.

“Today, we are seeing the rise of permanent renters – a new demographic in many Canadian markets, especially as a growing proportion of the population cannot assemble the down payment for a new home.”

In a separate report issued Wednesday, Avison Young says sales of commercial real estate in six major Canadian markets in the first half of this year have been lower overall than in 2014 – but more because of supply and price than because of interest by purchasers.

The combined sales of office, industrial, retail, multi-unit residential and land totalled $10.6-billion in the first half of 2015, down $2.4-billion or 19 per cent from a year ago. It said, however, the increased foreign capital – mainly from Asia – has pushed up pricing in Toronto and Vancouver and the second half of 2015 is shaping up to be busier.

Published by The Globe and Mail on Oct. 07, 2015


Stephen Harper

Stephen Harper wants to add another 700,000 homeowners in Canada. Is that what we really need?

Prime Minister Stephen Harper and the Conservatives say they have primed the housing pump enough that Canada is now set for all-time home ownership record.

The party boldly predicted the country will add another 700,000 homeowners and increase the percentage of Canadian households that own their property from 70 per cent to 72.5 per cent.

But the question some critics are quick to ask is whether we actually want so many people owning their homes, with some pointing to the housing crash in the United States that happened almost a decade ago as home ownership rates there soared to all-time highs just below 70 per cent before dropping to about 63 per cent earlier this year.

“The home ownership rate has been rising and it could go higher,” said David Madani, an economist with Capital Economics. “The problem is the only real two markets that are holding up are Vancouver and Toronto. Do you want home ownership to go up in those two markets? These are the markets that are the most overvalued.”

Affordability concerns have dogged those markets and the Tories once again promised Tuesday to investigate whether foreign ownership has been fuelling the housing markets in Toronto and Vancouver where the average detached homes sell for about $1 million and $1.4 million respectively.

Financial Post, published September 29, 2015

Toronto-area detached home prices $1M

It doesn’t matter where you go in the greater Toronto area, the price of a detached home is soaring faster than the rest of the market with the situation showing no signs of abating, according to new data.

September sales results from the Toronto Real Estate Board show the average price of a detached home reached $1,053,871, a 10.7 per cent increase from a year ago. But double digit increases have become the norm across the GTA for detached home with York region prices up 14.7 per cent in that category from a year ago.

Jason Mercer, TREB’s director of market analysis, said new listings or supply have started to increase in the GTA, but total active listing are still down from a year ago. “Expect strong rates of price growth to continue through the remainder of 2015 and into 2016,” he said, in a release.

The strength of the housing market in Ontario has led Helmut Pastrick, chief economist with Central 1 Credit Union, to boost his forecast all the way into 2017. “Sales have been strong this year but fewer new listings are coming on the market, so prices are rising in most regions. Continued low mortgage rates have helped spur sales,” he said, in a release.

Pastrick now predicts new records for price will be set across the province next year and the year after with the average reaching $538,000, up from the current $465,444.

All of this could be bad news for first-time buyers trying to scratch together enough money to buy a detached home. A survey released Monday from local Toronto brokerage Re/Max Hallmark Ltd. found 32 per cent of buyers over the next 18 months in the GTA will be of the first-time variety.

Reported by Financial Post

H o u s i n g a n d M a r k e t I n f o r m a t i o n

The vacancy rate rises in Quebec According to the Rental Market Survey conducted in the spring by Canada Mortgage and Housing Corporation (CMHC), the average
vacancy rate of private buildings with three units and over stood at 3.5 per cent in April in urban centres (10,000 or more) of Quebec. The change in the
nominal rate compared to that recorded in the spring of 2014 (+0.6 percentage point) was significant statistically.

This rise in the vacancy rate at the provincial level was attributable to changes in the Census Metropolitan areas (CMA) of Montreal and of Québec – which make up nearly 80 per cent of the rental housing stock of Quebec. That said, the Québec region was the only one among CMAs to have recorded a statistically significant variation (+1.4 per cent). With respect to other urban areas, the survey reported an increased rate in agglomerations with 10,000 to 49,999 inhabitants and stability in agglomerations with 50,000 to 99,999 inhabitants.

As for the picture of the market by unit size, whereas the results do not show statistically significant differences, they would suggest that the market was slightly tighter in the case of two- and three-bedroom apartments.

The vacancy rate for three-bedroom apartments was estimated at 2.9 per cent whereas that of bachelor units is 4.2 per cent. That said, given the statistical reliability at the regional level, it is not possible to say that the provincial result was widespread.


Finance Minister Jim Flaherty announced new mortgage rules Thursday that will make it tougher for Canadians to purchase homes.

The announcement marks the fourth time in four years the Conservatives have tightened the rules around mortgages in Canada.

Among the changes announced Thursday to the Canada Mortgage and Housing Corporation: the maximum amortization period for a mortgage will be reduced from the current 30 years to 25 years.

“This will further reduce the total interest payments Canadian families make on their mortgage, helping them build up value in their homes more quickly and pay off their mortgage debt sooner,” Flaherty said.

And homeowners looking to borrow against the equity they have in their homes will be limited to a maximum of 80 per cent of the home’s value, down from the current 85 per cent.

“Limiting the amount of refinancing will encourage homeowners to prudently manage borrowing against their properties and keep equity in their home,” Flaherty said.

The changes come as Flaherty and Bank of Canada Governor Mark Carney warn that Canadians’ debt levels are reaching record highs.

During his address, Flaherty said the U.S. economic woes have proven that an unhealthy housing market “can dictate the health of the broader economy.”

Flaherty also announced changes to debt service ratios — the percentage of income that an individual is allowed to take on as debt. The maximum gross debt service ratio will be capped at 39 per cent, while the maximum total debt service ratio will be capped at 44 per cent.

And Flaherty said the government is limiting mortgage insurance to homes under $1 million. Those who purchase homes worth more than $1 million will be required to have a down payment of 20 per cent or more, but will not have access to mortgage insurance.

CTV’s Chief Financial Commentator Pattie Lovett-Reid said the government is trying to protect Canadians from over-extending themselves financially.

“We know interest rates are artificially low, they are going to go up,” Lovett-Reid told CTV’s Canada AM. “Think of the worst-case scenario: If interest rates go up, are you going to be able to afford the payments? They’re concerned the real estate market in Canada is overheated, a bubble is starting to form, and they’re saying we’re going to slow it down.