Theme: Investing in the Future? Look at Bricks and Mortar
November 23, 2009REMAX Canada has a short while ago released a report that examines the last 30 years in the Canadian housing market. Over this period of time the report determines that investment in bricks and mortar has always been one of the best and most protected option.
“The stamina of the residential property sector cross-country has taken a multitude of economists and housing analysts by surprise once again,” says Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. There have been three large slumps in the Canadian property market over the last 30 years, two of them were in the 1980’s and the most recent in 2008. In comparison to the 1981 and 1989 market downturns the downturn in 2008 was the shortest with sales and prices quickly going up again. Purchasers have lost their market, which has now turned into leveraged or even a sellers’ area.
There are several reasons why there is a long term investment in the Canadian property market. Real estate embodies monetary and material “fortresses” for most Canadian investors. Over the last three decades there has been a notable rise in the purchase of properties of over 6%. In some districts it is higher than that, for example, Calgary 74.1%.
Vancouver, Victoria and Toronto had the highest growth in housing prices. Although there have been slumps in the property market it has remained a good investment. This years greatest growth in the housing market comes from the Greater Vancouver area with a massive 14% increase. The major buyers are depicted by first-entry purchasers, however the over $1 million segment is also being accelerated by trade-up buyers.
Those who have kept their eyes on the resale market for some years shouldn’t be surprised – Vancouver is the greatest performing market in Canada, in terms of real estate prices appreciation!
Since 1980, the average price of property in Vancouver grew by 473.7% while the average price in Canada reached 366.4%, from $100,065 to $574,061. For the similar period of time the amount of citizens owning their own home has increased nearly 10%. There is a colossal difference if you examine inflation over the similar period of time. There was just over a 150% increase in inflation according to the Bank of Canada’s inflation calculator. On an estimated figure you would see over a $300,000 net return on a real estate investment of $100,000 bought 30 years ago.
It seems that Canadians are familiar with this information. In a very recent Survey by The Angus Reid Omnibus, nearly 80% of participants put housing investment over stock investment.