Recreational property prices to rise 6% this year: Royal LePage
Canada’s recreational housing market is expected to boom over the summer season despite a softening in urban markets, according to a new report from Royal LePage.
The Royal LePage Recreational Properties Survey, published Wedneday, forecast the average price for a second home in Canada will increase 5.8 per cent year-over-year to $467,764 in 2018, fueled mostly by Generation X (between 36 to 51 years old) and Baby Boomer homebuyers.
Recreational properties in Ontario and Alberta will rise the most, with prices expected to rise 10.4 per cent to $535,885 and 8.9 per cent to $770,100, respectively, according to the Toronto-based brokerage.
"Driven by the strength of the nation's economy, Canada's recreational real estate market is set to experience another strong year,” Phil Soper, Royal LePage President and CEO, said in a release. "While home values and sales activity in Canada's largest urban markets have softened, demand for recreational properties remains robust in most regions.”
“The search for that perfect summer getaway continues unabated."
Only three regions – Manitoba, Atlantic Canada, and British Columbia – will experience price declines in the recreational property market, the report said.
Prices for second homes in B.C. are expected to decrease 2.8 per cent year-over-year to $531,333, mostly due to the speculation tax implemented by the province earlier this year. Royal LePage said the measure will lead many current homeowners to sell their secondary homes, creating more vacancies. However, 40 per cent of recreational property specialists surveyed expect B.C. sales to rise amid the resulting supply increase.
"With Canada's fastest growing economy, British Columbia's vast and varied recreational regions might be expected to lead the country,” Soper said. “That will not be the case in the near-term as new taxes aimed specifically at recreational property owners are expected to weaken markets across the province, driving would-be purchasers to invest elsewhere.”
Alberta residents, one of the largest groups of buyers in B.C.’s recreational market, are expected to increasingly look for secondary properties in their own province.
Overall, 42 per cent of the recreational property specialists surveyed said they expect sales activity to climb in their region at the end of this summer season, compared to the same period last year. But the robust sales activity isn’t expected to tighten supply, with respondents in every province, except for Ontario, predicting a rise in inventory when compared to 2017.
And when it comes to foreign buyers, the majority (73.5 per cent) surveyed said foreign ownership makes up less than five per cent of recreational markets.
“Foreign investment, international purchasers make up a very small portion of the recreational market,” Soper said. “And dreaded 'house flippers' are an urban phenomenon.”
Royal LePage polled 200 real estate advisors who specialize in recreational property in Canada between May 15 and June 18 for the survey.