Canadian recreational property prices continue to increase in most markets across the country, as demand remains strong and inventory remains scarce. Tight market conditions are expected as current cottage owners plan to stay put and young professionals enter the market in droves, according to the 2006 Royal LePage Recreational Property Report released today.
The report comprises a nationwide research poll of Canadian cottage owner and buyer attitudes and actions (conducted by Maritz Research) and a market analysis of recreational property prices, trends and activity in selected leisure markets across Canada.
According to the market analysis, significant price appreciation was recorded in most recreational markets and categories examined. While the average price of a standard waterfront, land access recreational property is $380,507, some of the more popular destinations - such as Grand Bend, Honey Harbour, Georgian Bay, Wasaga Beach, the Muskokas, West Kawarthas, Cranbrook, Kelowna, Vernon, Okanogan and Fernie - report sales in the range of $500,000 to over $1-million. The average price for a chalet is $413,694. Comparatively the national average price of a standard two-storey home is $340,956, according to the Q1 Royal LePage Survey of Canadian House Prices.
While prices are high, almost one-quarter (24%) of those planning to purchase are willing to spend more on their recreational property than on their primary residence. Over half of this group (52%) would spend from $50,000 to $150,000 more on a recreational property and fourteen per cent (14%) would spend over $150,000 more on a recreational property.
"Escalating recreational property prices are evident in the majority of markets across the country, and do not show signs of decreasing in the near future," said Phil Soper, president and CEO, Royal LePage Real Estate Services. "The rising prices are not surprising given the fact that there is a convergence of buyers entering the market - with urban professionals, young families and baby boomers all vying for properties with similar features."
Soper added: "Despite recreational property prices rising well above the average price of a primary residence in some regions, Canadian sun and ski seekers remain committed to the dream of leisure living. Interestingly, the poll demonstrated that almost twenty per cent (19%) of people planning or considering buying a recreational property plan to pay in cash."
Surprisingly, while thirty-five per cent (35%) of people planning and those who would consider buying a cottage have budgeted approximately $100,000 to less than $300,000 for their recreational property, only five per cent (5%) of people planning to buy have budgeted within $300,000 to less than $500,000 - the range encompassing the average cottage.
Attracted by the peace and tranquility of cottage living and spending time with family, young to middle-aged adults comprise the bulk of prospective buyers. The study found that seventy-eight per cent (78%) of Canadians who are likely to or planning to purchase a recreational property in the next three years are under 49 years of age.
While the desire for a cottage is strong, the search for a recreational property may prove rather difficult this year as only fifteen per cent (15%) of cottage owners reported that they are likely to sell their property within the next three years - a slight decrease from 2005 - limiting the amount of resale recreational properties coming onto the market. Additionally, almost sixty per cent (60%) of cottage owners plan to will their cottages to family.
While there are an infinite number of elements that make a recreational property special, Canadians list the top three most important features to be a waterfront property, a lot with mature trees for privacy, and a large dock on the water.
Other poll findings:
- Nine per cent (9%) of Canadians own a cottage/recreational property, while four per cent (4%) are planning to purchase and five per cent (5%) are considering purchasing within the next three years.
- When looking at alternative ways to finance the purchase of a recreational property, a surprising sixty-one per cent (61%) of those planning to or those who would consider purchasing said they would not consider buying a property with a sibling or family member. Similarly, sixty-four per cent (64%) of those planning to purchase said they would not consider renting it out during the year to make it more affordable.
- Of those polled, sixty-nine per cent (69%) of Canadians planning or considering to buy a cottage prefer a four-season capability recreational property to a one-season property.
- Sixty-one per cent (61%) preferred to be further removed from a town or small urban centre than in close proximity to urban services.
Maritz Research conducted the poll portion of the Royal LePage Recreational Property Report between April 27 and May 8, 2006. The poll is based on a randomly selected sample of 3,005 adult Canadians with a total of 529 Canadian respondents who qualified for the study. With a sample of this size, the results are considered accurate to within +/-4.26%, 19 times out of 20, of what they would have been, had the entire adult Canadian population been polled. This data was statistically weighted to ensure the sample's regional and age/sex composition reflects that of the actual Canadian population according to the 2001 Census data.
About Royal LePage
Royal LePage is Canada's leading provider of franchise services to residential real estate brokerages, with a network of over 11,700 agents and sales representatives in 600 locations across Canada operating under the Royal LePage, Johnston and Daniel, and Realty World brand names. Royal LePage manages the Royal LePage Franchise Services Fund, a TSX listed income trust, trading under the symbol "RSF.UN". For more information, visit http://www.royallepage.ca/.