| Royal Lepage published its Real Estate Investors Report, which discovered that more than a quarter of Canadians (26%) plan to buy an investment property in the next five years. This includes Canadians who already own investment properties and otherwise. Royal LePage surveyed over 1,000 adults from Canada for the report in March through Leger's online panel. The survey results indicate that the aspiration to own an investment property is high among Canadians, even when interest rates are very high. According to the survey results, 11% of the country's population currently owns residential investment properties. 64% own one property, and 32% own two or more properties. 23% of Canadians without residential investment properties said they are likely to buy one by 2028. Among the current investors, more than half (51%) said they are likely to purchase another investment property in the next five years. The sentiment in Greater Toronto Area (GTAA), Greater Montreal Area (GMA), and Greater Vancouver Area (GVA) mirrored the national trend. The graph below shows the keenness of existing investment property owners to invest in another property.
President and CEO of Royal LePage, Phil Soper, said "Many choose to invest in real estate not only as a way of generating income and reaping the benefits of value appreciation but to provide an opening into the market for future generations of their family. Despite the hurdles of low home supply and increased lending rates, young people are more inclined than ever to make real estate investing a part of their financial planning for the future." He added that the younger generation is prioritizing owning an investment property over owning a primary residence. The top priorities when buying investment properties are the opportunity for its value to appreciate over time, positive cash flow on a monthly basis, and low maintenance. 47% of investors said the proximity to a major Canadian university influenced their decision to buy in a particular neighborhood. Coincidentally, a report prepared by the Candian Imperial Bank of Commerce and real estate research firm Urbanation revealed that, for the first time, 48% of leverage condo investors from the GTA were cash flow positive in 2022. The share of cash flow positive condos decreased last year. In 2020 and 2021, 60% and 56% of the condos were cash flow positive. According to CIBC's Benjamin Tal and Urbanation's Shaun Hildebrand, this marks a meaningful shift that may potentially signal that a change in investor behavior is on the horizon. The report expects the share of cash flow positive condos to worsen in the coming years. A reduction in interest rates and an increase in rents could soften the impact but would not be enough to stop the investors' financial situation from worsening. |
