Did you know?
One in six Canadians plans to buy an investment property in the next 12 to 24 months. Based on on-line interviews conducted in December, 2005 with 1,200 homeowners across Canada, there is a developing interest in residential real estate as an investment. Close to 30% of respondents already owned one or more investment properties and approximately 18% indicated that real estate represented more than 51% of their total investment portfolio.
Investors are turning to real estate as an investment as the risk factor is lower than other financial vehicles. Forty-three per cent of those who intended to invest in the next two years are under the age of 40.
Over the past five years, Canadian residential prices have appreciated close to 10% on average. That’s a considerable return on investment.
In recognition of residential real estate’s potential for long-term growth, 50% of investors indicated they plan to hold their properties for 10 or more years. However, if an investor were to realize a tidy profit in the interim, they may be inclined to move on to the next income property.
Females represented 16% of those who say they intend to purchase an investment property in the next two years. Singles are also playing a greater role in investment, with 10 per cent planning to buy an income property in 2006 and 2007.
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According to reported household income levels, today’s investors are solidly within the middle class, with one in five earning $50,000 - $60,000 a year and one in three earning $75,000-$100,000.
Spending intentions almost equally split between those planning to spend less than $200,000 and those considering properties in the $200,000 - $500,000 range, suggesting that investment interest is spread throughout the marketplace, with respect to property, category and geography. For example, 41% of investors say they intend to purchase a home, 35 per cent a multiple unit building, 24% a condominium, and 13% a townhome.
Corporate executives and entrepreneurs are expected to be the most active investors, representing 25% and 19% of respondents respectively.
Investors were generally well-educated, with most possessing some post-secondary education. Fourteen per cent had gone on to a Master’s or Professional Degree.
Information from Toronto-based Hart & Associates Management Consultants. The results are considered accurate within a margin of error of plus or minus 2.5 percentage points 19 times out of 20.
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