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Buying a property in Canada – investing in the most appreciating property market

Canada remains one of the most popular expat destinations, with many buying properties in Canada. Over 650,000 Brits currently call Canada home. The country offers wide-open spaces and safe, affluent cities. The advantages of living in the Great White North are easy to see. Canada is one safest, secure and happy nations on the planet, with numerous additional perks from polar bears to the breath-taking Northern Lights. Many make a move across the Atlantic every year.

The property market in Canada

The Canadian property market is electric; house prices in May 2021 recorded a 31% year on year growth. Experts believe that this trend will continue as interest rates remain low. Such is the acceleration in prices that lawmakers are under pressure to create a measure to curb appetite. Many locals buying a property is unattainable.

Property price rises have been fuelled by a few factors, including low-interest rates and a Covid related appetite for properties with more space. A phenomenon is seen across many stable property markets, including the UK & France. Rises have also been attributed to demand far outstripping supply.

While Canada’s cities have tried to accelerate urban development, buyers have been turning to the suburbs, searching for larger family homes with more space.

Should you buy or rent in Canada?

This decision will entirely depend on your situation, whether you have the deposit and your plans. Those relocating with lucrative job roles may be tempted to buy for future capital appreciation. Others on a stricter budget or who don’t have enough deposit may be reluctant to buy. 

These are the pros and cons of both:

Benefits of renting

Flexibility: Renting a home only requires a maximum commitment of 12 months. If you want to move, you can. Likewise, your rental can coincide with the job role if your job is based on a fixed term relocation. 

Maintenance Free: Owning your own home in Canada comes along with maintenance and upkeep costs. When renting, the responsibility of upkeep on the property is the landlord or owners. If anything goes wrong, you can contact your property manager, and it will be fixed. 

Cheaper to rent: With property prices in Canada increasing at the rate they are, paying a mortgage can often be much more expensive than paying rent. Therefore, renting for many will be the most economical way of living in Canada. 

Benefits of buying

On an appreciating asset: Due to the appetite for Canadian property, the prospect of owning a home that appreciates and represents a secure investment is attractive. When you come to sell your home, if the market has continued to flourish, you will sell an appreciating asset and make a profit. 

Life stability: Owning a home in Canada affords you both financial and home life stability. Having your property lays down roots.

Growing an equity pot: The money you pay on the mortgage of your property represents the equity in your home. Renting pays the landlords equity, lining their pockets. 

Make it your own: whereas landlords won’t like you changing too much in their property. When you buy a home, you have the freedom (with relevant planning permissions). 

As with most choices, the answer to whether you should buy or rent in Canada will come down to your own set of circumstances. Those with a substantial deposit who know they want to remain in Canada will have a different perspective than those on a 1-year work contract who are purely seeking an adventure. 

Best places to buy in Canada

Quinte– Quinte’s largest employer is the Canadian Air Force to the large airbase. 2019 saw prices rise by 7.8% from 2018, with the average home priced at CA$ 345,000. Quinte is a lovely Canadian City on Lake Ontario. 

Windsor, Essex – Windsor has several auto manufacturing plants known as the ‘Automotive Capital of Canada’. Tourism and hospitality also make up a large percentage of local GDP. The average home in Windsor appreciated by 8.6% between 2018 and 2018, with an average value of CA$303,000 being reported. 

Vancouver Island – Vancouver is unreachable for many, but Vancouver Island can be within your budget. Logging and fishing are the primary vocations in the area. Vancouver Island is also very scenic, meaning Tourism is also an opportunity. Prices rise between 2018 and 2019 by 9.3%, taking the average property priced to CA$485,000.

Thunder Bay, ON – Property in Thunder Bay represents excellent value. The bay is one of the most heavily populated areas in NW Ontario. The public sector is the largest employer, whilst the forestry sector is the biggest private-sector employer. The city is now focusing on other sectors, including medicine. Property prices between 2018 and 2019 increased by 11%, taking the average property price to CA$ 240,000. 

Trois–Rivieres – Excellent for those wanting to get on the Canadian property ladder, Trois Rivieres offers excellent value. As the oldest industrial city in Canada, renewable energy and tech are a huge growth sector. Property values grew by 11.9% between 2018 and 2019, with the average home now costing CA$160,000.

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London and St Thomas, ON – Hit hard by the 2009 economic crash, London’s manufacturing sector was devastated. The city has since revolutionised and is now considered a tech hub. The medical industry is also growing, with London’s Heath Sciences Centre now London biggest employer. St Thomas is more well known for vehicle manufacturing than tech. Prices in London and St Thomas increased by 14.4% from 2018 to 2019, taking the average price to CA$ 385,000. 

Sherbrooke, QC – Those trying to invest in a city home representing excellent value should seriously consider Sherbrooke, Quebec. This university city has a buoyant rental market, and the city’s universities are the biggest employers. Those planning on relocating to Sherbrooke are advised to brush up on their French as 90% of employers use the language. Between 2018 and 2019, prices grew by 22.9%, with average property prices in Sherbrooke sat at CA$ 254,000. 

Can a foreigner buy a property in Canada?

Canada is regulated provincially but remains open to foreign buyers. Those looking to own homes remain non-residents. Non-residents benefit from the same owner’s rights as residents. However, due to Canada being provincially regulated, it is worth reading the fine print before purchasing if you are unsure. 

Those planning on staying in Canada for less than six months are considered non-residents; however, a visa can be obtained if you wish to stay longer. 

The process to move to Canada can be very arduous, and it’s always worth liaising with an immigration lawyer to overseas the process. 

Associated costs of buying in Canada

Those buying a home should budget for between 3-7% of the property’s value when calculating buying costs. The exact associated cost will depend on the property’s value, whether buying with a mortgage and the type of property. Please find below a summary of the costs when buying a property in Canada. 

Property Survey: Like in the UK, you’ll need to have a survey on your prospective purchase. The survey will cost between CA$ 400 to CA$ 2000. This price will depend on the size and levels of detail taken on the survey. 

Title Insurance: This cost should be included in your property buying legal fees. However, if it isn’t, we suggest budgeting roughly CA$400 for title insurance. 

Estoppel certificate: only needed when buying a condo in Canada. An Estoppel certificate costs around CA$100. 

Property conveyancing and legal fees: These fees typically equate to 0.5% to 1% of the properties price. Legal fees in Canada typically cost CA$1500, for a home cost CA$400,000.  

Property Tax: when buying a home in Canada, you’ll pay a land transfer tax in Alberta, Nova Scotia and Saskatchewan. In British Columbia and Ontario, the tax will vary from 0.5% of the property value to 2%. 

Realtor & Estate agents fees: estate agent fees are paid by the vendor and buyer. When an agent sources properties and works on your behalf, the benefit becomes apparent when unable to travel to Canada. Property buyers can expect to pay 2.5% in agent fees. 

Newbuild property or resale?

Approximately a quarter of all homes purchased in Canada are newly built. The remaining 75% are resale homes. Deciding on which is best for you will come down to different motivations, restraints and your budget. These are the advantages of buying a new build or resale home in Canada:

New build Property in Canada

Freedom of choice: when you buy a new home in Canada, you can select your builder, always reputation, and ensure you do the research. 

Comfort: new builds meet up to date Canadian building codes meaning build quality could be superior when compared against a resale home. New build properties meet standards for both efficiency and safety.

Communal areas: many new build homes are Canada are gated residences meaning they will have amenities that older homes won’t. A strong sense of community can grow in managed buildings and locations, ensuring that the building remains in good condition and order.

Quality product: due to the high standards of build-in Canada, buyers of new properties can be assured they are getting a quality product. In turn, this means buyers won’t have many or indeed any immediate repair costs. 

Put your stamp on the property: when buying a new home in Canada, property buyers can expect the flexibility to personalise their new home. This freedom could mean the choice of paints, wallpaper, tiles or carpets. Meaning you could move into a home that meets your exact requirements. 

Warranty: New homes in Canada include a warranty, meaning that any issues will be covered by the builder and repaired. Reputable builders will also have an aftercare program to ensure any issues are ironed out quickly. 

Better design: New build homes commonly feature much better design and resale homes. They combine new functional spaces which are well planned. 

Resale property in Canada

Established neighbourhoods: resale homes can be located in more established areas. This could include being closer to the town or city centre. Resale homes are also typically closer to public transport and schools. 

Better value: Resale homes usually are cheaper on a CA$ per square foot basis and can represent better value than new build homes. Prices can also be easier to negotiate on, meaning the owner may be flexible in accepting a lower offer. However, this can move against you if another buyer wants the house. 

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More character: resale houses typically have more character, with many believing new builds prioritise function over flair. A home packed with charm and personality will generally be easier to sell when you decide to move on. 

More flexible move-in: Resale properties tend to have more flexible move-in dates; everything is part of the negotiating, including taking ownership. Many find the proposition of purchasing a resale home much more appealing for this reason. 

More diverse neighbourhood: established areas will have a melting pot of residents rather than a set demographic buying in a gated community. 

Most expensive areas in Canada

Calgary, AB – located in the western province of Alberta, Calgary has roughly 1.5m inhabitants making Calgary Alberta’s most populated city. Due to price increases in Toronto and Vancouver, which are now unattainable by many, Calgary has experienced increases with the average home now costing CA$571,00.

Kitchener-Cambridge- Waterloo, ON – The city can be found just 62 miles from Toronto, named Berlin initially until being changed in a 1916 referendum. The city had a population of 233,222 in 2016. Average house prices in Kitchener-Cambridge- Waterloo currently stand at CA$583,144. 

Victoria, BC – The capital of British Columbia, Victoria City centre, has roughly 90,000 and is the 7th most densely populated city in Canada. The average property price in Victoria is now CA$764,000.

Vancouver, BC – In previous years, Vancouver was lauded as the most expensive city in Canada. Still, in recent years, Toronto has surpassed Vancouver. Between 2000 to 2019, average property prices in Vancouver increased 240%, now topping CA$ 879,000. 

Toronto, ON – in 2016, Toronto registered a population of close to 2,8m, making it the most populated city in Canada. Toronto is a business city that has finance houses and art and culture. Average house prices in Toronto now exceed CA$ 921,000, increasing faster than NY, LA and San Francisco. 

Least expensive Areas in Canada

Saint John, New Brunswick – As the oldest recognised city in Canada, Saint John is a Seaport city in New Brunswick. The port is the third-largest by goods processed in Canada. Saint John is the most heavily populated in New Brunswick. Average Property Prices in Saint john are around CA$ 195,000. 

Saguenay, Quebec – Saguenay is a city located roughly 200 miles from Quebec. The city is divided into three boroughs; these are Chicoutimi, Jonquiere and La Baie. Average property prices in Saguenay are around CA$ 206,242. 

Regina, Saskatchewan – The capital of Saskatchewan province, Regina’s city population is roughly 215,000. Commonly known as the Queen City, Regina is the second-largest city in the territory. Average property prices in Regina are priced at CA$ 273,885. 

Winnipeg, Manitoba – The largest city in the province of Manitoba, Winnipeg has a city population of 778,000, making it Canada’s seventh most populated city. Commonly known as the ‘gateway to the west, ‘ Winnipeg is a transport hub and celebrates a diverse economy. Average house prices in Winnipeg are priced at CA$320,000. 

Saskatoon, Saskatchewan – The number one city by population in Saskatchewan, Saskatoon boasts 246,376 inhabitants. Saskatoon has a university that carries the same name and enjoys several large parks on the shores of the South Saskatchewan River. Average home prices in Saskatoon are CA$ 321,000. 

Most popular areas in Canada with expats

The most popular areas where expatriates reside in Canada are Vancouver, Toronto, Calgary, Montreal, and Ottawa. Quality of life ranks highly in these Cities.

Toronto – is the most diverse city in Canada, making it a friendly and open location for Canada. 

Vancouver – Vancouver is a very tolerant and friendly city with the benefit of wide-open space and incredible landscape. 

Calgary – Known as a safe city, Calgary has meagre crime rates making the city an attractive option for expatriates with young families. 

Montreal – Rents in Montreal are lower than many higher-priced cities such as Toronto. The city offers an outstanding work-life balance. Long cold winters may deter expats from warmer climates.

Ottawa – Canada’s capital city boasts the second-highest standard of living in the whole country. It’s also rated the third cleanest in the entire world. Ottawa is the fourth most populated city in the country. 

Top tips for those buying Canada

Be aware of your budget – when buying land in Toronto or Vancouver as a foreign buyer, you must be mindful of a 15% foreign buyer tax. Always be sure to have a good grasp of costs when buying property.  

Rich pickings in vacant land – with inner-city and family homes increasing exponentially, savvy investors look towards vacant land. In some areas of Canada, it’s possible to find vacant land just a stone’s throw from major Canadian cities.

Vacation properties – holiday homes in rural locations can provide an excellent opportunity. Much like owning a holiday home in Europe or the US, or UK. Rental demand is high, especially for lakeside homes.

Arrange financing well in advance – make sure your mortgage is in place before making offers on a property. Having funding in place will improve your chances when negotiating on properties. Those with financing in place are more likely to be able to negotiate on a property. 

Financing a home in Canada

Non-residents shouldn’t face too many hurdles when trying to finance a property in Canada. Very few foreign banks will finance a home in Canada; with this being said, a handful of US banks will be open to lending for a home in Canada.

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Always use a mortgage broker who specialises in the Canadian market. If relocating to Canada, applying for citizenship can make the process easier but isn’t a must. Canada is a welcoming country to foreigners, with non-residents and foreigners having the same rights as citizens.

A lender will typically offer 65% of the properties value, meaning you’ll have to have a considerable deposit to buy in Canada.

Additionally, there is a 15% tax for non-resident, which equates to 15-20% of the properties value. The amount charged varies between provinces and cities.

Transferring money to buy a property in Canada

Whether buying a new build or existing property in Canada, using an FX broker can be beneficial when planning your overseas money transfers. 

If buying a newly built home, an FX broker will help you schedule the stage payments. They allow you to benefit from positive currency movements and protect your purchase against currency devaluation. 

Likewise, when buying an existing home in Canada, they will also help you work towards an advantageous rate and alert you to when the rate moves against you. 

When purchasing a home with a mortgage, an FX broker can also manage any mortgage payments and upkeep cost you might need to make. 

Opening a bank account in Canada to buy a home

When buying a home in Canada, you will need a Canadian bank account to cover upkeep costs and bills. Typically for a Canadian bank account to be set up, the below is required: 

Drivers Licence – An up to date and valid proof of Identification. This ID can be a driver’s license, foreign passport or national identity card (This may take time to be issued in Canada).  

Utility Bill – Proof of address. Usually, a utility bill or Canadian employment contract linking you to your new residence is expected. This address proof may be needed more than once. 

Employment – Canada is notoriously very strict on immigration. A variety of immigration-related documents are needed, such as employment status, type of job, and industry and tax number/code if known is not unheard of to be requested.  

Once your Canadian bank account is approved, you can begin to transfer money to Canada to credit your bank account or pay for your Canadian home. When you transfer money to Canada, it will typically take 1-3 days to arrive in a Canadian account. 

The property buying process in Canada

Make sure homeownership is for you – Buying a property is a big commitment before starting to view homes. Make sure that property ownership is for you. With this being said, homeownership can be very rewarding. Many enjoy the security and long-term investment that it offers.

Location and the type of property – Once you’ve confirmed that you want to become a homeowner,

 you’ll need to find the area and type of property that suits your needs. Always be aware of the costs that your new home will entail, especially if your commute is longer or there are bills that you didn’t previously have to pay.

Understand how much the property will cost – once you’ve found some properties which fit your budget and requirements. It’s worth getting your finances in order. Potentially pairing back your outgoings and making sure money you plan to use for a deposit is in an account that can be accessed quickly.

Get a pre-approved mortgage – Once you feel comfortable proceeding with purchasing a home, it’s worth getting a mortgage approved before placing offers. A pre-approved mortgage will allow you to negotiate better on a home you like, plus give you a clear picture of your budget.

Property search – with the mortgage pre-approval under your belt, you can now begin to view homes that are within your budget and fit your criteria. Once you’ve found a property in your chosen area which suits your needs, you can begin to negotiate with owners and agents.

Getting a property offer accepted – once you’ve found the perfect home, it’s time to make an offer. Your realtor will help you with this process; it’s worth researching recent sale prices in the area using them as a barometer to make offers. Try not to become too emotionally invested in the process. This emotion can often lead to you pushing over your budget.

Offer accepted and finalising your mortgage – once the vendor accepts your offer and buying conditions. The mortgage broker will have to work on completing your mortgage with a lender. If your property meets the lender’s criteria, there should be no issues obtaining the finance. In the meantime, you and your realtor can work on the other conditions or any snag list.

Conclude the property deal – after the financing has been approved and all buying conditions have been met, the purchase can be concluded. The professionals involved, including the realtor, mortgage broker and lawyer, will coordinate the final steps of the purchase, realising funding and completing the conveyancing.

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