Rising interest rates affect many owners of income-producing residential properties. In Montreal, 20% say they are “likely” to sell within two years. But, over the longer term, this type of investment continues to have a strong pull: a quarter of Canadians are considering a purchase within five years.
These are two of the conclusions revealed by a Canada-wide survey conducted by the real estate brokerage firm Royal LePage.
“Much higher mortgage rates and the rising cost of home maintenance and utilities have prompted some over-leveraged investors to consider selling,” writes Phil Soper, CEO of Royal LePage.
In Montreal, 26% of income property owners are “considering” this scenario (20% say they are “likely” to sell).
The proportion of worried Montreal owners, 26%, is comparable to what is observed elsewhere in Canada, the survey reveals. In Vancouver, 28% say they are “likely” to sell within two years; in Toronto, it’s 24%. Nationally, it’s 31%.
That being said, Canadians are keeping their eye on interest rates, hoping for an improvement, and remain extremely interested in the residential rental real estate market. A heavy trend reinforced by the fact that new housing starts are not keeping up with demand and “that the country will welcome an unprecedented number of immigrants in the years to come”, said Mr. Soper.
Almost a quarter (23%) of Canadians who do not own an income property say they are likely to buy one within five years. Among those who have at least one, more than half (51%) say they are likely to buy another within five years.
Among real estate investors aged 18-34, 44% own more than one income-producing residential property. Among investors aged 35 to 54, it’s 29%, among those aged 55 and over, 25%.
Among the 18-34 year olds, there is an interesting generational peculiarity.
The survey reveals the existence of a minority category of Canadian owners (15%) of rental properties who do not own their principal residence and who do not live in their rental property. The majority of them are between 18 and 34 years old.
They are among more and more Canadians who are investing in this type of property quite far from where they live, buying buildings that they can afford to pay for, for lack of being able, for the moment, to buy close to home. them.
The portrait of the Montreal investor owning rental properties is as follows: 64% of them own a single residential income property; 34% own two or more; 14% say they own three or more properties, well above the national average (8%) and investors in Greater Toronto (6%) and Greater Vancouver (7%). In addition, 52% of Montreal investors say they are likely to buy another residential income property within 5 years.
“The attraction of real estate investment in Montreal is not unrelated to the fact that the price of properties there is much more affordable than in the other two largest Canadian cities,” explains Aline Zafirian, of Royal LePage Village. She notes that the down payment required in the area is much less compared to a similar property in Toronto, which is worth nearly double. “This partly explains why Montreal investors own more income properties in Montreal than elsewhere in the country. »