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Canadians Inclination to Homeownership Guarantees Strong Demand

Article Submitted by: Vishal Dwivedi

Wednesday, 24 February 2010

International real estate investors or foreigners looking to buy homes for sale abroad should turn their eyes to Canada. Investments in residential properties in Canada may be an excellent investment decision because of strong forces that underlie the residential real estate market in Canada. Investments in residential properties in Canada thrive in an environment characterized by a strong domestic demand in an otherwise depressed state of housing around the world. But, what is especially working to the benefit of investments in residential real estate in Canada in the long-run is the Canadians' inclination to homeownership.

The popular perception in favor of homeownership in Canada has not been deterred by the turmoil that has ravaged residential property markets around the world, especially in the United States. Neither have the general economic woes, most notably the rising unemployment, forced Canadians to delay the coming true of their homeownership dream until long in the future. On the contrary, an increasing number of Canadians is interested in buying a house in the coming years. Especially interested in attaining homeownership are the young Canadians, who see equity-building through homeownership as a cost-saving alternative to the increasingly costly rental housing. This positive outlook for the housing demand in Canada should also be a major positive signal to international property investors, including those from overseas, that home purchases or investments in residential property in Canada come with an excellent outlook for future demand growth and thus for property value appreciation.

According to the 16th Annual Homeownership Survey conducted by the Royal Bank of Canada, more than a quarter of survey respondents say they intend to purchase a home over the next two years. This represents an increase in the number of individuals considering a home purchase within the next two years from a low 19 per cent to 23 per cent and testifies to the improving demand prospects for residential properties in Canada in the near future. The unhampered confidence in homeownership is generally consistent with the traditional position of the Canadian households that puts a high value on homeownership and equity accumulation. Evidence for this may be found in the fact that over 40 per cent of all mortgage holders in Canada have at least 50 per cent of the value of their homes in equity, which is much higher than the ratio for the American households. This bodes well for the healthy expansion of the residential market in Canada, and should be a boon for investment in residential property from both domestic and overseas buyers and investors.

The prospects for the residential property demand in Canada look particularly promising given that the increasing number of young Canadians appears likely to purchase a home within the next couple of years. Among the respondents to the survey that are 35 years of age and younger, some 48 per cent say they plan to buy a home within the next two years. This represents a sharp increase in the number of potential homeowners from 36 per cent that was reported in the previous survey. A moderate decline in the prices of Canadian residential properties coupled with exceptionally low mortgage rates, relatively favorable lending standards, and the tax credit for first-time homebuyers, will support the short-term demand, likely boosting sales volumes and prices in the next year and beyond. This adds to the positive outlook for residential housing in Canada. Hence, investments in residential properties in Canada should be the preferred choice for real estate investors, including those from abroad.

When the promise of a pent-up demand in the Canadian residential property market is factored into investment calculations, it appears obvious that any investment in residential property in Canada made today will benefit from an increased demand in the coming future. The decline in prices of Canadian residential properties this year and low mortgage rates have reduced the cost of capital for those home buyers or real estate investors who consider financing their purchase with a mortgage. Therefore, notwithstanding the current economic weakness and the drop in home sales activity this year, the financial factors appear perfectly positioned to allow both Canadian home buyers and foreigners making investments in residential property to capitalize on real estate that will yield sizable returns in the medium and long run.

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About The Author:

Jimco International is overseas real restate agent deals in Investment Overseas Properties and International real estate for buying and selling of properties. You can get more information on Jimco if you're looking for buying property abroad & Ski property for sale.

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