Historically low interest rates and a stable real estate environment have made investing in Canadian real estate increasingly attractive; especially when one considers the mounting volatility of global stock markets in the past few years.
The global recession shed new light on Canada’s strong economic fundamentals that many had overlooked in favour of the larger economy to the south. Canada emerged from the recession with mere cuts and bruises compared to the U.S. and other industrialized economies around the world.
Thanks in part to strict government regulations on mortgage lending practices, the real estate market in Canada remains prosperous—certainly compared to the devastating sub-prime mortgage fiasco that took place in the United States.
In Canada, only 5% of mortgages are sub-prime, compared to about 20% in the U.S, according to CIBC World Markets.
Canada has emerged as a global leader in fiscal responsibility; and government regulation of the banks is cited as a major factor. What took place in the U.S could not easily occur in Canada because of the strict rules governing mortgages and other lending. This has a significant stabilizing effect on real estate markets in Canada.
With ultra-low interest rates and a gradually improving economy, Canada was among only 12 countries in 2010 that experienced increases in property values—performing better than most markets in the U.S.
Overall, the Canadian real estate market is an attractive place for investors and is becoming increasingly appealing to foreign investors. Of course, given the size and broad regional diversities of this country, the Canadian real estate market isn’t really one market. It is better defined by provincial markets which better represent the economic diversity of the country.