Canadians Pursuing Recreational Property for Lifestyle

Canadians Pursuing Recreational Property for Lifestyle, despite Tax Concerns and Stricter Mortgage Rules

National opinion poll shows condominiums increasingly popular choice for a second home
TORONTO, May 31, 2010 –

Almost half of Canadians considering buying a recreational property will do so to improve their lifestyle, despite concerns about increasing taxes, rising interest rates and new regulations that require higher down payments on second homes, according to a nationwide survey of Canadian attitudes towards recreational property ownership conducted by Angus Reid and commissioned by Royal LePage Real Estate Services.

When buyers were asked why they plan to purchase recreational property, lifestyle was the number one reason given, at 47 per cent. Only one in four buyers say new Canada Mortgage and Housing Corporation regulations reduce their desire or ability to purchase a recreational property. The changes will require Canadians to pay a minimum 20 per cent down payment on any residential or recreational property they purchase that is not their primary home.

Comparatively, Canadians are more concerned about increases in taxation affecting their ability to buy vacation properties, with 49 per cent responding that they are concerned about new taxation rules such as the HST on new-construction homes while 46 per cent express concern about increasing property taxes. Just over one-quarter of those surveyed (26 per cent) want to purchase a recreational property before interest rates start to rise, while 10 per cent said a hike in interest rates would stop them from purchasing.

“Canadians are generally confident about buying recreational properties because they see a pay off in terms of improved quality of life,” said Phil Soper, president and chief executive, Royal LePage Real Estate Services. “The survey results show that tightening of lending requirements for second homes, coupled with an increase in taxes and expectations of higher interest rates, may have a dampening effect on the recreational property market. However, there continues to be strong demand for second homes, and Canadians appear prepared to make significant investments in order to enjoy their leisure time.”

Forty-three per cent of respondents said they would buy a vacation property because it is a good investment – down from 64 per cent in a comparable Royal LePage survey conducted in 2009.

“Fewer people are looking to acquire recreational property for its investment value this year, a direct result of rising cottage prices. The brave bargain hunters that purchased during the depths of the 2008-2009 recession have been rewarded by appreciating prices this year,” Soper said.

One-third of respondents in the 2010 survey said they will not have to make any financial or lifestyle changes in order to afford a recreational property, while 25 per cent of respondents said they plan to rent out their recreational property for part of the year (up from 13 per cent in 2009). Only 15 per cent plan to purchase a vacation home with friends or family.

The survey was commissioned as part of the 2010 Royal LePage Recreational Property Report, an annual market analysis of recreational property prices, trends and activity in selected leisure markets across the country.

The chart below shows the typical price range for standard waterfront, land-access properties across Canada. Properties in BC, Ontario and New Brunswick saw typical 3 bedroom, 100 foot lot properties sell above $1 million. New Brunswick also offered the most affordable properties, with some averaging as low as $65,000.

2010 Recreational Property Price SummaryAverage Price Range by Province**
Standard Waterfront, Land Access Cottage1,000 sq feet, 3 bedrooms, 100 foot lot

PROVINCE

AVERAGE PRICE RANGE 2010
Prince Edward Island
$180,000 – $200,000
Nova Scotia
$190,000
Newfoundland
$110,000
New Brunswick
$65,000 – $1,000,000
Quebec
$326,000 – $650,000
Ontario
$140,000 – $1,050,000
Manitoba
$189,000 – $360,000
Saskatchewan
$245,600 – $600,000
Alberta
$300,000 – $555,000
British Columbia
$345,000 – $1,500,000
NATIONAL AVERAGE
$65,000 – $1,500,000

According to the national poll, waterfront properties continue to be the most desirable recreational real estate for potential buyers, with 34 per cent ranking a “cottage by a lake” as their number one choice, down sharply from 68 per cent in 2009. Meanwhile, condominiums are the preferred property type for 24 per cent of buyers, up from just six per cent of buyers in 2009.

“Once again, lifestyle appears to be the driving factor behind recreational property trends, as more and more buyers are telling us they prefer the relatively hassle-free ownership of a second-home condominium, where you can spend your weekend on the water instead of whacking weeds,” said Soper.

For almost half of survey respondents, buying a recreational property this year will have little or no impact on their ability to vacation elsewhere. Forty-four per cent said buying a recreational property will make no difference to their vacation plans, while 31 per cent of respondents said recreational property ownership will make them more likely to vacation elsewhere. “This may indicate that buyers intend to use rental income from their vacation homes to finance travel abroad, or it could reflect the growing popularity of international house swapping or exchanges,” said Soper.

In the survey, buyers ranked the most important features they look for in a recreational property. Fifty-five per cent said waterfront or beach access, while 46 per cent answered four-season use, and 43 per cent said their vacation home must be in a quiet location.



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