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Recreational property prices will rise in 2024 as vacation home owners choose to hold on to their properties despite concerns about interest rates, affordability and recent tax changes, according to a report from a major real estate firm.
ReMax's Canada Cottage Cabin Trends Report predicts recreational property prices will increase 6.8 percent in 2024, with the majority of Canadian cottage owners (64 percent) not even thinking about selling their properties this year , although the federal government has announced new capital gains rules in the budget.
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“A flood of offers has not hit the Canadian recreational real estate market this spring and is unlikely to occur this year,” ReMax said in the report released Tuesday.
The analysis took into account the challenges posed by interest rates and affordability, as well as the federal government's recent announcement that it would increase capital gains tax on annual amounts above $250,000, a change that has sparked speculation that vacation home owners could try to top June 25 deadline by making their properties available for the sake of the will.
Despite an increase in listings, the report found that for most owners, the lifestyle benefits and potential for future investment returns outweighed the upcoming tax changes.
“Even with the capital gains tax change coming into effect on June 25, we don’t expect a huge flood of new listings and sales from holiday home owners trying to get under control. However, RE/MAX brokers and agents in some regions have recently reported an increase in listings,” Christopher Alexander, president of RE/MAX Canada, said in the report.
In addition to the revised capital gains calculations, some provinces have implemented restrictions on short-term rentals. But even these did not significantly influence recreational property owners' decision to sell: 58 percent of those who bought with the intention of renting out chose to keep their properties, the report said. Only 29 percent are thinking about selling, primarily because the rental income expected from the purchase cannot be achieved.
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The report showed there are more homes for sale in some areas of western Canada, such as central Alberta, Sylvan Lake and Canmore.
Prices vary in other countries. In British Columbia, average recreational property prices have increased in popular destinations such as Whistler, while they have decreased in Ucluelet. Going forward, ReMax expects prices to increase in most of the regions it covers.
In Ontario, the Muskoka and Haliburton County markets remain well attended, while others are more balanced. Families are the primary buyers in Ontario.
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In Atlantic Canada, many regions are within the seller's market area, with the exception of Charlottetown, where it is more balanced. Prices have increased in some markets, such as northern Nova Scotia, while prices have decreased in others, such as St. John's.
The report found that strong demand and limited inventory will keep the market strong through the summer and winter.
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