Cottage prices expected to rise in 2024
Capital gains tax changes having little to no effect
EVEN WITH THE CHANGE TO THE CAPITAL GAINS TAX ... WE DON'T ANTICIPATE A WIDESPREAD FLOOD OF NEW LISTINGS AND SALES BY COTTAGE OWNERS TRYING TO GET IN UNDER THE WIRE.
— CHRISTOPHER ALEXANDER, RE/MAX CANADA PRESIDENT
Recreational property prices will increase in 2024 as cottage owners opt to retain their properties despite concerns about interest rates, affordability and recent tax changes, according to a report from a major real estate listing firm.
Remax's Canada Cottage Cabin Trends Report projects that recreational property prices will increase by 6.8 per cent in 2024, with the majority of Canadian cottage owners (64 per cent) not even considering selling their properties this year, despite new capital gains rules announced in the federal budget.
“A flood of listings hasn't hit Canada's recreational property market this spring, and is unlikely to transpire this year,” Remax said in the report, released Tuesday.
The analysis factored in the challenges posed by interest rates and affordability, as well as the federal government's recent announcement that it is raising the capital gains tax on annual amounts exceeding $250,000, a change that has sparked speculation that cottage owners might try to beat a June 25 deadline by putting their properties up for sale.
Despite an uptick in listings, the report found the lifestyle benefits and potential for future returns on investment outweighed the upcoming tax changes for most owners.
“Even with the change to the capital gains tax that will be taking effect on June 25, we don't anticipate a widespread flood of new listings and sales by cottage owners trying to get in under the wire. However, RE/MAX brokers and agents in some regions have reported a recent uptick in listings,” RE/ MAX Canada president Christopher Alexander said in the report.
In addition to the revised capital gains calculations, some provinces have put limitations on short-term rentals. But these, too, have not significantly influenced the decision of recreational property owners to sell, with 58 per cent of those who bought with the intent of renting choosing to hold onto their properties, the report found.
Only 29 per cent are considering selling, primarily due to the inability to generate the rental income they had anticipated when the property was purchased.
The report showed some areas in Western Canada, such as Central Alberta, Sylvan Lake and Canmore are seeing more properties for sale. Prices are fluctuating in others. In British Columbia, average prices for recreational properties have surged in popular destinations such as Whistler, while declining in Ucluelet.
Looking forward, Remax anticipates prices will trend up in the majority of the regions it covers.
In Ontario, the Muskoka and Haliburton County markets continue to be busy, while others are more balanced. Families are the main buyers in Ontario.
In Atlantic Canada, many regions are in seller's market territory, with the exception of Charlottetown, which is more balanced. Prices have gone up in some markets, such as Northern Nova Scotia, but down in others, such as St. John's.
The report found strong demand and limited inventory will keep the market strong through the summer and into the winter.