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Increases of 8% are forecast for the province and 5% nationally
Published on March 20, 2024 • Last updated 23 hours ago • 3 minutes reading time
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Cottages in Ontario are expected to drive a rise in recreational property prices this year. Photo by Postmedia
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Ontario will lead all of Canada in vacation home price appreciation in 2024, according to a forecast from real estate franchisor Royal LePage.
The average price of single-family vacation homes in the province will rise eight percent this year, surpassing the national average of five percent. The average price in Ontario is $662,148, compared to the expected national average of $678,930. according to a report from Royal LePage released Wednesday.
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British Columbia follows closely behind with a projected price increase of five percent to more than $1.1 million, while the Prairies can expect a modest growth rate of just 0.5 percent to $286,928. The most expensive place to buy a single-family vacation home is still Alberta, where prices are expected to rise four percent to nearly $1.3 million.
There has been an influx of real estate in the cottage country markets in recent years. This increase was attributed to pandemic buyers who were either unable to maintain their mortgage payments or were forced to return to full-time office work due to increased interest rates. Inflation and the cost of living have also helped push buyers away.
Such circumstances contributed to Ontario prices falling five per cent in 2023 compared to 2022, marking the largest decline in Canada during that period.
“Inflation reared its ugly head, interest rates rose and the ensuing economic downturn caused vacation home, cabin and chalet prices to slide from their pandemic-related highs, but the fundamental demand for leisure living has not abated,” said Phil Soper, CEO of Royal LePage , in the report. “We believe this market segment will see a resurgence in activity in 2024.”
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According to a report from Zoocasa.com, Ontario's cottage country areas experienced notable price increases over the six-year period ending January 2024, with nine out of 11 areas experiencing growth of over 40 per cent. Prices in Bracebridge, Parry Sound and Kawartha Lakes increased 64.1 percent, 60.1 percent and 56.8 percent, respectively. Tiny, Ontario saw the smallest increase at 29.9 per cent.
Local real estate agent Exp Realty LLC, Karen Hanes, said vacation home buyers are making a comeback.
“Although home sales were lower during the winter months, there is still high demand and a continued desire for people to own a second home in one of Ontario's most beautiful areas,” she said in the Zoocasa report. “Spring activity suggests increased buyer demand.”
Royal LePage data suggests that waterfront property prices fell 8.2 percent year-over-year in 2023, the sharpest decline among leisure property categories, but Hanes expects this type of property to be in will be most in demand this year.
“Waterfront real estate enjoys high demand from city residents, and that demand continually drives prices higher over time, regardless of market fluctuations,” Hanes said. “The value of waterfront holiday homes will inevitably increase as they are quite limited in some ways. Because only a few are built, everything is there, making it a solid investment for a family.”
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Muskoka was one of two areas where waterfront real estate prices in Ontario increased year over year in 2023. Hanes said the luxury real estate market, particularly in areas like Muskoka, is less affected by changes in interest rates and the economy compared to the broader real estate market.
“Interest rates shape the affordability of many properties on and off the water, but for luxury properties the situation is very different and more resilient,” she said. “The ban on foreign home buyers does not apply to Muskoka, so our global marketing services allow us to make luxury properties available to international buyers, which also helps keep the market strong.”
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