Ontario Cottage Prices to Rise 8 Percent This Year, Other Provinces Close Behind: Royal LePage

A person walks past multiple for-sale and sold real estate signs in Mississauga, Ont., on May 24, 2023. (Nathan Denette/The Canadian Press)

Cottage prices are set to surge across Canada this year with value in Ontario climbing more than any other province, according to a new forecast from Royal LePage.

An increase in single-family recreational home prices in 2024 will hit all provincial markets, with the level of price appreciation rising to 8 percent in Ontario, three percent above the average national increase of 5 percent, the report said. Price appreciation is the increase in the value of a property over a period of time.

The increase, according to the report, can be attributed to the forecasted low inventory and high demand. While Ontario leads the pack at 8 percent, British Columbia, Atlantic Canada, and Alberta will also see significant increases at 5 percent, 4.5 percent, and 4 percent respectively.

The report said the increase in B.C. has elevated prices to more than $1.1 million, while prices in Alberta sit at nearly $1.3 million. By comparison, the Prairies’ more modest growth rate of 0.5 percent sets the average expected price at $286,928. Despite the 8 percent increase, Ontario’s median cottage price sits in the middle of the pack at $662,148.

On average, cottages in Canada will increase 5 percent over last year to hit $678,930 in 2024 thanks to a boost in consumer confidence that is expected to bring buyers back to the market.

There was a “sizeable rise in demand” for houses, especially cottages, during the pandemic, said Royal LePage CEO Phil Soper in a press release announcing the report.

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He said the trend during those years to buy off the beaten path was similar to “gold rush fever” as the wide availability of high-speed internet permitted people to work from secluded lakefront and mountain properties.

The excess demand pushed recreational property prices to “unprecedented heights,” Mr. Soper said.

Then, “inflation reared its ugly head, interest rates soared, and the economic downturn that followed pushed cottage, cabin, and chalet prices off those pandemic peaks, yet the fundamental demand for recreational living has not abated,” he said. “We believe that this market segment will see a resurgence of activity in 2024.”

Ontario Market

Analysis from real estate firm Zoocasa found that nine out of 11 cottage country markets in Ontario experienced growth of more than 40 percent over a six-year period ending in January 2024.

Prices in Bracebridge, Parry Sound, and Kawartha Lakes jumped 64.1 percent, 60.1 percent, and 56.8 percent, respectively. Huntsville, Orillia, and the Blue Mountains all enjoyed growth of more than 50 percent while Muskoka Lakes, Collingwood, and the Lake of Bays were in the 44 percent range.

Real estate agent Karen Hanes said buyer confidence is on the upswing in Ontario.

“Even though home sales have been lower during the winter months, there’s still a high demand and continued desire for people to own a second property in one of the most beautiful areas in Ontario,” she said in the Zoocasa report. “Early spring activity is hinting at increased demand from buyers.”

Ms. Hanes is predicting high demand for waterfront properties which, in turn, will push up prices.

“Waterfront cottage values are bound to rise due to them being quite limited in a sense,” she said. “With few being built, what’s available is all there is, making them a solid investment for a family.”

Interest Rate Cuts Could Impact Market

Demand will increase even more if the Bank of Canada slashes interest rates in the next few months as is widely expected, according to the Royal LePage report.

A poll of real estate experts found that 83 percent expect lower interest rates to increase demand in their regions. The survey found that 78 percent of recreational property buyers typically obtain financing, such as a loan or mortgage.

While recreational home purchases tend to be less mortgage-heavy than traditional homes, an interest rate cut will still have a positive effect, Mr. Soper said.

“Recreational property purchases are not as heavily impacted by mortgage rates as those in the residential market,” he said. “That said, consumer confidence in general will get a boost when we see a cut to the Bank of Canada’s key lending rate, expected later this year. This lift in activity will put upward pressure on prices. And, if this coincides with an influx of inventory, we should see a boost in sales as well.”