Real Estate Investing is becoming Popular in Canada

Investment property ownership in Canada is on the rise, with approximately 11% or 4.4 million Canadians owning investment properties, as per a survey conducted by real estate company Royal LePage.

Investment property ownership in Canada is on the rise, with approximately 11% or 4.4 million Canadians owning investment properties, as per a survey conducted by real estate company Royal LePage. The survey further revealed that at least half of these property owners plan to add more investments in their real estate portfolios in the next five years. In addition to this, the report estimates that 23% of Canadians who have never invested in real estate plan to do so before 2028.

The increase in investment property ownership can be attributed to the high demand for rental properties in Canada, as people view rental income as an additional source of income. This is especially the case since rising mortgage rates are making it difficult for homeowners and potential homebuyers to afford a home. The national median home price in Canada was around CAD 716,000 (about $525,000) in April 2023, down 3.9% from the same period last year, but up 103,500 CAD compared to the beginning of the year.

The growing rental segment in the country is seeing prices rise as demand increases. According to a report by rental network Rental.ca, the national median rent was around CAD 2,002 in April 2023, unchanged from the previous month, but up 9.6% over the same period last year. Housing affordability in the country is plummeting, and many people are turning towards the rental segment as a result.

The increase in mortgage interest rates is a part of policymakers' efforts to achieve the target of inflation adjustment to 2%, according to Professor Luis Silva of the University of Toronto. However, this rate hike could prompt nearly a third of investors to consider selling one or more of their investment properties.

Despite this, the Royal LePage survey still shows that a significant proportion of real estate investors in Canada are young, owning more than one residential property. Of these young investors aged 18-34, 44% own two or more investment properties, compared to 29% of investors aged 35-54 who own two or more properties. The report suggests that young people are investing in real estate due to the severe housing shortage in Canada and the country's annual welcoming of more than half a million immigrants, leading to an increase in property prices.

In conclusion, investment property ownership in Canada is expected to continue growing in the coming years as demand for rental properties increases due to the country's housing crisis. However, the possibility of increasing mortgage interest rates and rising property prices could impact the real estate market, prompting investors to consider selling their property investments.