Jobs & Money Detail
Canada’s price rises outpacing UK’s
We all know about the property boom that has engulfed Britain. You know, the one that caused average prices to rise by 82.8 per cent between the beginning of 2001 and end of 2004
While this escalating market has now started to slow – recent statistics show that prices rose just 5.4 per cent between May 2005 and May 2006 – those of you looking to swap life in the UK for one across the Atlantic could be about to find yourself in the heart of another boom. In the 12 months to April 2006 the average property price in Canada rose by 12.9 per cent. "Property prices in Canada are rising due to a period of low interest rates coupled with strong buyer demand and a very low inventory (the lowest for 11 years), a very strong economy, a strong loonie (Canadian dollar), and the fact that Canada has benefited from being an oil producing country at a time of record oil prices," explains Sue Gerryts of real estate and settlement company Relocation2BC. "The serious shortage of inventory has fuelled buyer demand," she adds.
Western boom
Price increases have been especially sharp in western Canada where a majority of the country's oil fields are located. It's no surprise, then, that Alberta, Canada's biggest oil producing province, boasts the second-highest annual price increases in Canada – 26.5 per cent in the 12 months to April 2006, only Nova Scotia (37.1 per cent) can claim to have had a more booming property market in this period. "Prices have risen in all areas of Alberta with Calgary, Edmonton and the surrounding communities experiencing the largest increases," explains realtor Warren Green of Albertaimmigration.com. "With their booming economies Calgary and Edmonton, while still on average far less expensive than Toronto and Vancouver, are playing a bit of catch up with prices in these markets," he adds.
Recent statistics from the Canadian Real Estate Association (CREA) show that property price growth in Calgary outstripped that of popular migrant cities Vancouver, Toronto, and Montreal between April 2005 and 2006, while Edmonton's price growth was less than only Vancouver's. Average prices in the two cities currently stand at CDN$341,838 for Calgary and CDN$226,846 for Edmonton.
However, these prices pale into insignificance compared to what you can expect to pay in BC – the province with the highest average property values – and more specifically the province's two main cities, Vancouver and Victoria.
According to the CREA statistics BC's capital, Victoria, boast the highest average prices of any Canadian city – CDN$512,844 – but Vancouver's median value is not far behind at CDN$502,846. "The market in Greater Vancouver has risen considerably over the last year," says Gerryts. "According to statistics taken from the Real Estate Board of Greater Vancouver for May 2006 the overall price of detached homes has risen by 21.5 per cent since May 2005."
Gerryts continues: "The more affordable areas are seeing staggering rises as people move from areas that are getting too expensive. Burnaby has experienced a 12-month increase of 26.5 per cent to CDN$632,216, Port Moody a 24.2 per cent increase to CDN$565,186, Port Coquitlam a 22.2 per cent rise to CDN$454,711, and prices in East Vancouver have risen by 26.7 per cent to CDN$577,412.
"The more affluent areas are not immune from price rises either. Vancouver West has seen a price rise of 24.4 per cent, pushing the median price of a detached home to over CDN$1 million, which makes North and West Vancouver's increases of 16.1 per cent and 17.7 per cent look reasonable. The median house prices there are CDN$741,523 and CDN$1,208,993 respectively.
Affordable Atlantic
Not every area of Canada is experiencing such extreme price hikes. Take New Brunswick on the country's Atlantic coast, for example. "In our particular area prices have increased but I would say not substantially, maybe by 5 per cent in the higher resale areas," says Linda Currie of all All Seasons Realty Ltd which sell properties in the St Stephen, Fredericton, Woodstock and Plaster Rock areas of the province. "Our area is one of the few in Canada that still has quite affordable housing."
Indeed, the recent CREA figures places the average property price for the whole of New Brunswick at just CDN$134,345. Only Prince Edward Island and Saskatchewan have lower average prices. "The British purchasers I have sold to have found house prices here to be so low that they have been able to buy a house on a huge lot that is twice as large as compared to where they used to live and for half of the price they would have had to pay there.
Even in Nova Scotia, where price rises have been driven by increased Canadian and American demand for a second home in the province, the average price of a property is still only CDN$224,951. However, should increases continue at their recent dramatic level – the average was just CDN$163,975 at the same time last year – then it may not be too long until Nova Scotia, and the Atlantic provinces in general, become increasingly less affordable.
Getting a foot on the ladder
Of course while house price growth is positive insomuch as it helps to fuel the country's economy, for those trying to get their foot onto the country's property ladder the news isn't so encouraging. "First time purchasers are really worried about being priced out of the market," says Gerryts. "We recently dealt with three sets of buyers (all young couples) who were looking for their first apartment on the North Shore. "We kept meeting the same sets of people at all the showings and most of the offers we were involved in were 'multiple offers' (where all the realtors get one chance to present their offer to the seller, who picks one). As a result, buyers try to outbid each other and this is pushing up prices. As realtors we are writing more offers before we win one."
Green, however, says the situation is not so bad in Alberta. "While home prices are on the rise, the wage rates in Alberta are also outpacing that of the balance of the country," he says. "First time purchasers will look at things like longer term mortgages to reduce monthly payments or satellite areas outside the major centres where prices may be lower."
The fact remains, though, that British migrants must get used to the fact that equity from their homes in the UK won't go as far in Canada as it once did. However, both Green and Gerryts do have some advice that could help you to secure the most affordable price possible. "Taking equity out of your house in the UK before you emigrate and buying an investment property or a new build 'off plan' before it is built can be a good idea. By the time you move here prices will have risen," says Gerryts. "It may also be worth buying a home with a suite that can be rented out or a room where a student can live," Gerryts continues. "This will give you a helping hand with the mortgage. Lots of homes have suites underneath them and demand is high, especially if they are rented out."
Green, meanwhile, advises that you "Determine your budget and become knowledgeable about the areas that typically have homes in this price range. Work with someone who is an experienced negotiator and who has a close eye on the market. "Desirable homes within the lower price ranges can sell in a mater of hours, and when demand is higher than supply bidding wars can result on well priced homes in the market. Have your financing in place so that you can move on a property quickly. "Make the offer as appealing as you can by accommodating their terms as much as possible. This includes being flexible on things like possession dates. If the seller wants a different closing date than you prefer, measure its importance against the value of presenting a clean offer to the seller."
The Canadian property market is showing no signs of slowing down anytime soon, with demand for housing still comfortably outstripping supply. And although it is unlikely to match the highs of the boom seen in the UK five years ago it may be worth keeping a careful eye on the market in the coming months to ensure that dream home you've for so long pictured owning isn't out of your budget by the time your visas arrive and you're ready to start your new life.
For further information:
Relocation2BC
Albertaimmigration.com
All Seasons Realty
Register for your FREE emigration starter pack
Subscribe to Emigrate Canada newspaper. Read more ...