Investor participation in Canada’s real estate market has long been a focal point of discussions about affordability and market dynamics. A new report by Statistics Canada delves into the role of investors in housing markets across Nova Scotia, New Brunswick, and British Columbia from 2018 to 2020. By examining pre-pandemic and early-pandemic sales, the report highlights how investors influence affordability and demographic trends in these provinces.

Key Findings: Investor Representation Among Buyers

Investors accounted for a significant share of residential property purchases:

  • Nova Scotia led with 29.2% of buyers being investors in 2018, declining slightly to 26.7% in 2020.
  • British Columbia followed closely with 24.8% investor representation on average during the period.
  • New Brunswick had the lowest share, with investors comprising 20.3% of buyers on average.

Within urban centers, Kelowna had the highest investor buyer rate at 25%, followed by Vancouver and Victoria at 24% and 23%, respectively. This indicates that certain urban areas attract more investment due to economic opportunities and growth potential.

Condominium Apartments: A Preferred Choice for Investors

Statistics reveal that investors are more likely to purchase condominium apartments than houses. In 2019, investors made up:

  • 33.4% of condo buyers in British Columbia, compared to 18.9% for houses.
  • 33.7% of condo buyers in Nova Scotia, compared to 24.7% for houses.

In New Brunswick, investor representation in condos and houses was nearly equal, with 14.5% of condo buyers and 16.2% of house buyers being investors. Condos appeal to investors due to their rental potential and lower maintenance requirements compared to standalone houses.

Median Purchase Prices: Investors vs. Non-Investors

Investor spending patterns varied significantly across the provinces, with distinct contrasts in median purchase prices:

  • In Nova Scotia, investors paid a median price of $225,000 for houses in 2019, compared to $308,000 for non-investors.
  • In New Brunswick, investors spent a median of $148,000 on houses, while non-investors paid $188,000.
  • In British Columbia, investors often purchased more expensive properties, with median prices reaching $892,000 for in-province investors and a staggering $980,000 for non-resident buyers. In contrast, non-investors paid a median of $820,000.

This disparity reflects the distinct market pressures in BC, where higher property values and international interest play a significant role.

Types of Investor Buyers

The report categorized investors into four distinct groups:

  1. Business investor buyers – Corporate entities purchasing residential properties, often for commercial or rental purposes.
  2. Non-resident investor buyers – Individuals residing outside Canada who accounted for as much as 7.8% of purchases in some areas, such as Richmond and the City of Vancouver.
  3. Out-of-province investor buyers – Canadians buying properties outside their home province.
  4. In-province investor buyers – Local residents with multiple properties deemed investment assets.

This classification highlights the diverse motivations and demographics of investor buyers, from international speculators to local landlords expanding their portfolios.

Investor buyers tended to be older than non-investors, reflecting the need for accumulated wealth to invest in additional properties. For example, the median age of in-province investor buyers was significantly higher than that of non-investor buyers, indicating years of capital accumulation before entering the investment market.

Immigrants were prominently overrepresented among investor buyers:

  • In the Vancouver Census Metropolitan Area (CMA), immigrants accounted for 67% of in-province investor buyers, despite making up only about 40% of the population.
  • In Halifax and other cities in Nova Scotia, immigrant investor buyers also outpaced their population representation.

This trend can be attributed to a cultural emphasis on real estate as a secure investment, coupled with the challenges immigrants face in accessing other investment opportunities. In many cases, immigrant investor buyers had lower incomes than their Canadian-born counterparts. For example, in Vancouver, immigrant investors had a median income of $60,000, compared to $90,000 for Canadian-born investors.

While most individual investors owned one or two properties, about 18% of investor buyers in Nova Scotia owned three or more properties, compared to 11.8% in BC. These larger-scale investors were more prevalent in rural areas, where properties are typically more affordable, enabling portfolio expansion.

Regional Trends: Rural vs. Urban Areas

Investor activity varied widely between rural and urban areas:

  • Nova Scotia: Rural regions like Inverness (Cape Breton) and the South Shore near Halifax saw investor buyer rates of 51.7% and 43.4%, respectively. These areas are popular for vacation homes and rental properties.
  • British Columbia: Tourist-heavy locations like Whistler had nearly 70% of buyers as investors, while ski resorts in the interior, such as Fernie and Revelstoke, also attracted significant investment.
  • New Brunswick: Moncton and Saint John attracted fewer investors, but rural areas still saw notable activity due to lower property prices and potential for seasonal rentals.

The onset of the COVID-19 pandemic in 2020 reshaped investor activity. While investor shares declined in Nova Scotia and British Columbia due to uncertainties and market disruptions, New Brunswick experienced an increase as buyers sought affordable and less densely populated regions.

Policy Implications and Housing Affordability

Investor activity in Canada’s housing market has prompted significant policy discussions. Measures such as the foreign buyer tax in British Columbia and Ontario, and Canada’s federal ban on non-resident purchases in urban areas, aim to address affordability concerns. Yet, the rising in-province investor participation in pre-pandemic years underscores the need for more localized strategies to ensure housing remains accessible.

Summary

Statistics Canada’s report highlights the complexity of investor activity in Canadian housing markets. From urban condos to rural vacation homes, investors shape affordability, demographics, and regional dynamics. As policymakers address these trends, maintaining a balance between investment and accessibility will be key to fostering a sustainable housing market.

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