Canadian property prices have been rising rapidly for the best part of the past decade. In March 2016, the average price of a property in the country climbed to an all time high of more than CDN$508,000. An astonishing figure given that the country’s national average property price had only reached the CDN$200,000 mark for the first time in early 2003.
Perhaps unsurprisingly, given this steep – and consistent – price growth, Canada is widely considered to have one of the most unaffordable property markets in the world. A report released in April 2016 by the Canada Mortgage and Housing Corporation (CMHC) reveals that nine out of Canada’s 15 largest housing markets are showing signs of being overvalued.
Average house values in the majority of Canada’s largest cities are comfortably above the national average price of CDN$508,576 with the average price of a Vancouver property more than CDN$1 million. That said, average property prices in numerous cities, including popular immigrant settlement destination in Atlantic Canada, remain below the national value – and it is still possible to pick up a new home for less than CDN$200,000 in some areas.
In recent years, the Canadian government has attempted to curb the rising property price growth, with one step having been to tighten mortgage lending criteria. However, it is still possible to borrow up to 50 per cent of the value of a property and the minimum loan is CDN$100,000. At the beginning to 2015, interest rates were at record lows, starting from just 2.74 per cent for a one-year fixed deal, and 3.54 per cent for a five-year fixed deal.
A key calculation used in any mortgage application is the debt-to-income ratio, which establishes whether you can afford to maintain the mortgage repayments, so your existing liabilities including loans, credit card payments and maintenance are taken into account, together with the proposed Canadian mortgage payments. All of this must not exceed 35 per cent of your gross monthly income. Lenders tend to look for very detailed information about your financial status, so it’s important to have any required paperwork in good order. Your chances of being accepted for a mortgage will increase greatly if you can prove that you’ve got a sound financial profile.
The first step when it comes to buying a house in Canada (once you have found one you like, of course), is to give the seller an Offer to Purchase (sometimes called an Agreement of Purchase and Sale depending on the province where you are buying a home). It is very helpful to work with a realtor (and/or a lawyer/notary) to prepare this offer, as it is a legal document that needs to be carefully prepared. This document includes all the details of the sale (including caveats which allow you to pull out of the sale if certain conditions are not met), so it is advised to get a lawyer to look at it before presenting it to the vendor. The realtor presents the offer to the seller, and if the offer is accepted both parties then sign the document – it becomes legally binding once it is signed by the buyer. If you withdraw from the offer at this stage for any reason other than one stated in your initial Offer to Purchase, then you will almost certainly lose your deposit (which could be anywhere between 2-10 per cent of the purchase price, depending on the province in which you are looking to buy) and could also even be sued by the seller.
If you are not in a position to buy a property immediately upon arriving to live in Canada, then in order to rent a property it is worth noting that while apartments can often be rented by the month, to rent a house you usually need to sign a rental agreement (or lease) for a year. This is a legally binding contract between you and the landlord – individual terms will usually be down to the homeowner’s own discretion.
It is fairly likely that you will be asked to pay a security deposit before renting a property. A security deposit is an amount of money that the landlord keeps in case you damage the rental property. It usually equals one month of rent, and is paid back at the expiry of the lease, assuming the house is left in good condition. As with property purchasing prices, what you can expect to pay for a rental property varies dramatically depending on the area in which you wish to live. Although such properties are available in popular immigrant areas – Canadian homeowners are well aware of the potential yield profits available in these cities – prices can be expensive. It’s probably no great surprise to discover that February 2015 data found Vancouver and Toronto to have the priciest rentals, with the average one-bedroom apartments available for between CDN$1,063 and CDN$1,201 a month.
While there is no typical type of Canadian home – each province, and even different cities within the same province, has different styles – the one thing you can be confident about is that your new home across the Atlantic will be bigger than your home in the UK. The average size of a Canadian abode is 181m2, compared to 98.6m2 in the UK. According to Statistics Canada figures, the average Canadian dwelling has 6.4 rooms, with Newfoundland and Labrador properties boasting the most rooms (7.2) and Nunavut the fewest (5).
Although Canada may not boast the same renowned warm climate as other popular long-haul destinations for British immigrants, outdoor space is still important to Canadian homeowners. Many properties boast sizable yards – ideal for snowball fights and building snowmen in the winter, and then bringing out the barbecue once the summer arrives.