Canada property is a good investment opportunity

By Tom Derbyshire on February 21, 2008 12:26 PM |

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While much talk in the media relates to the sub-prime mortgage market meltdown in the US, the global credit crunch, weakening currencies and of general uncertainty, Canada’s positive prospects are being overlooked.

Sometimes considered a poorer relation to the United States or overlooked as a leading economy of the world in favour of the UK and the US for example, Canada is actually the one nation that is quietly thriving in these times of fiscal insecurity.

Canada is first among G8 countries when it comes to the quality of life it offers its citizens, it is first when it comes to having the lowest cost of living, and first in terms of enjoying the lowest unemployment rate – and Canada’s property market is offering increasing numbers of overseas buyers an affordable way to own a stunning and accessible second, retirement or permanent home abroad.

Whereas Canada’s economy has indeed often trailed the US economy, today it is leading the US – as is its Canadian dollar currency which, on January 24, gained the most since at least 1971 because of a surge in investor interest and confidence in commodity-exporting countries such as Canada, according to a Bloomberg report.

There are a number of key factors supporting the positive prospects of the Canadian economy and in turn, its housing market.

Firstly, the Canadian economy is strongly built upon its natural resources such as its gas and oil reserves – it has the second largest oil reserve in the world and is the third largest producer of natural gas. Going forward, the Government and private sector are pumping significant funding into greater exploration to find even more deposits.

So successful is this particular sector of the economy that there is an employment growth rate of over 5 per cent per annum in Alberta where much of the oil and gas are sourced, and in certain parts of Canada there is actually a shortage of workers which prompted international headhunting.

Until just five years ago a significant proportion of all Canadian exports were headed for the US, but seeing tough times ahead for the US economy, the Canadian government has been tireless in its support of
businesses diversifying their export focus, so that today almost a quarter of all exports are headed to non-US-based destinations.

This is a significant increase and has meant that whilst the US economy is suffering greatly, the knock-on effect in Canada has been far reduced.

In terms of the housing market prospects in Canada, whereas in 2007 the US media were focused
on record numbers of home repossessions, Canada was celebrating the fact that for the first time in its
history, The Canadian Real Estate Association reported a billion dollars worth of home sales.

Also in 2007, when the US was intensely focused on the fact that there had been massive over exposure in the sub-prime mortgage market, Canada was quietly confident in its citizens’ ability to repay their mortgages, because less than 5 per cent of its home-based lending market is sub-prime.

According to John Prior, the principal of Undiscovered Properties, there was a “3.3 per cent increase in home sales in the second quarter of 2007, taking the year’s growth to almost 8 per cent year-on-year”.

There was almost an 11 per cent year-on-year increase in average home prices in the 25 main cities with a national projection of 6.7 per cent for 2007 and 6.1 per cent in 2008, according to the Canadian Real Estate Association.

He added: “Because Canada’s prospects are so healthy in terms of its economy, its employment opportunities and its housing market, in 2007 there were so many people emigrating to Canada that now one in five people in Canada is an expat, which is the highest level in 75 years.”