26% of Canadians intend to buy investment property within five years, survey says

More than a quarter of Canadians have plans to purchase an investment property in the next five years according to a new survey from Royal LePage, while high interest rates have some real estate investors thinking about selling.

The survey, conducted by Leger, found that 26% of respondents said they are likely to buy an investment property within five years. Eleven per cent of Canadians currently own an investment property, and just over half of those investors said they planned to buy another within five years.

“We know that the value of home ownership is strong among Canadians – it is clear that possessing real estate remains a desirable means for building wealth over time,” Phil Soper, president and CEO of Royal LePage, said in a news release.

Interest-rate pressure

However, elevated interest rates appeared to be dampening some people’s investment property outlook.

Just under one-third of residential real estate investors said they had considered selling one or more of their properties because of higher lending rates. Investors under the age of 35 were more likely to be weighing that option, at 54%.

Young property investors

Young Canadians still appear motivated to start investing in real estate, despite well-documented challenges with the country’s real estate market when it comes to high prices, steep interest rates, and low supply.

The survey found that investors aged 18 to 34 were more likely to own more than one investment property compared with those aged 35 and older.

It also found that 15% of residential real estate investors did not own their primary residence, and most of those people were in the 18-34 cohort.

“Despite the hurdles of low home supply and increased lending rates, young people are more inclined than ever to make real estate investing a part of their financial planning for the future,” Soper said. “In fact, survey results tell us that many of them are actually prioritizing an investment property over owning their primary residence.”

Most desirable properties

Single-family detached homes were the most popular type of investment property, the survey said, with 44% of investors owning such homes. Condominiums were the second most popular at 37%, then townhomes at 11%.

The opportunity for long-term property value appreciation was the top priority with 69% of real estate investors, followed by positive monthly cash flow, and low maintenance costs.

Nearly half of investors said their investment property is in a town they don’t currently reside, at 44%. Proximity to a postsecondary institution was a factor in the decision about where to buy for 47% of investors.