Foreign Real Estate Investments – Is It a Good Time to Invest in Canadian Real Estate?

Now that the rules of the pandemic are getting relaxed all over the world, people are searching for a source of passive income. The income from a rental property is traditional and one of the best sources of earning passive income.

This trend has given a boom to the real estate market. Canada has seen the inclining trend in the real estate market in recent times. Owning a rental property in a city like Montreal can be an excellent investment and an opportunity to encash an ongoing trend.

Becoming an owner of a rental property is not an easy task. A long-vacant period of a rental property may tarnish your dreams of earning rental incomes. On the other hand, unpaid bills can have adverse effects on your prosperity. It is better to buy properties in different cities to get a better return on your investment. It is like following the investment rule of not putting all the eggs in a single basket.

Does the Weather in Canada Support Real Estate Investments?

It is a general perception that the weather in Canada is cold and snowy, but the truth is that Canadian weather is as diverse as its landscape. Canadians enjoy the benefits of four distinctive seasons. Coasts are mild, while the prairies are hot and dry in summers. The central part of the country is humid, and of course, the winters are cold and snowy.

The daytime temperature in summers can rise to 35 degrees centigrade and can drop as low as -25 degrees in winters.

The climate of Canada favors the real estate market of the country. Investors thinking to invest in real estate must seize the opportunity to own a rental property in Canada.

Real Estate in Canada Witnessing an All-Time Boom

The outbreak of the Covid-19 pandemic slowed the pace of the real estate market around the world, but bounced back sturdily as soon as the pandemic norms were eased in the country. In 2020, the cost to own a house rose by 9.36% in 11 prime cities of Canada, which was the highest since 2016.

The prices are rising continuously for 12 consecutive years. The Year-Over-Year (YOY) rise is as follows:

       ●       1.95% in 2019

       ●       2.15% in 2018

       ●       8.92% in 2017

       ●       12.25% in 2016

The last quarter of the year 2020 witnessed an increase of 2.81% in house prices.

Here are some figures from the Real Estate Association of Canada that shows the rise in house prices according to the type of property.

       ●       Single story family home cost rises with an average of 15.9% in 2020.

       ●       Double-story family home cost increases by 16.5% YOY.

       ●       Townhouse owing cost rises on an average of 10.9% during the similar phase.

       ●       Apartments reported an average gain of 4.2% in 2020.

Note: All the above figures are inflation-adjusted

Why Invest in Canadian Real Estate?

Here are some of the main reasons which support investing in the Canadian real estate market.

1. Diversified Investments

A successful investor always makes a diversified investment. A diversified investment ensures return even in times of a dip in multiple sectors. Similarly, having a diversified investment in the real estate market is very necessary. If the prices drop in some particular location, you can fetch your profits from other properties in a different location.

Canadian law gives several advantages to the investors investing in real estate. The tax system allows leverage on the refinancing of properties. You can restore a new loan with an existing loan.

2. Taxation Benefits

Canada offers several tax benefits to the investors of the real estate market. It is one of the reasons you should own a property in Canada.

Here are some of the tax benefits:

       ●       Amortization at an annual rate of 4% on the purchase price

       ●       A lucrative tax credit structure

       ●       Lowered tax on property income

       ●       Local financing facilities for foreign investors

       ●       Foreign investors are exempted from contributing to social security programs

       ●       A progressive real estate market

The real estate market has shown significant growth for continuous 20 years. Montreal’s real estate market reported progress of 5.5% each year, and it continued its pace in the pandemic too. It is, therefore, favorable to invest in such a market that can fetch you good returns on investment along with the income till the time you hold on the property.

3. Affordable and Attractive Prices

The rate per square meter is very affordable in Montreal and other progressive cities of Canada. The price of a property may vary from $2800 to $4000 in Canada. The prices depend on the property’s location and market conditions.

4. Fast-Growing Market with Assured Return

The Canadian economy is a fast developing economy with the potential to further improve the economic conditions. The unemployment rate is very low in the country. The province of Quebec is one of the most promising regions of the economic boom in the country.

5. Demand for Rental Properties

Montreal is the immigration center and economic hub of Canada. The area has some famous educational institutions and universities which attract students from all around the world. The demands for rental properties are always high in the region.

Invest in Canadian Real Estate and Make the Most from the Growing Market

While investing their money, people are generally confused about whether to own a house or invest in mutual funds or the stock market. The income from the stock market is not constant and involves a risk of losing the capital invested. The rental incomes are constant, and the investment is free from risk. The continuous appreciation in the property’s valuation is another benefit for the investor.

The Canadian real estate market is on the boom because of the favorable federal policies which makes it the most suitable time to invest in the real estate market of Canada.