For those looking for a long-term investment opportunity, buying pre-construction properties is a common approach. Many are drawn to this option because of the potential gain in property value, but how do you determine if this investment is a good financial decision? Understanding historical price appreciation trends can help you get a glimpse of what to expect off your investment in the future. In this blog post, we analyze the historical price appreciation trends in pre-construction in Ontario, showcasing how property prices have appreciated over the years in different markets. By the end of this article, you will have a better understanding of the long-term investment potential of pre-construction properties in Ontario.
In Ontario, pre-construction properties are considerably cheaper to start with than properties already in the market. The highest appreciation trend documented is in recent years. The average appreciation of a pre-construction property in Ontario over the past ten years is approximately 5% per year. While this may seem small, remember that this is on top of the property’s original value. As a result, for every hundred thousand dollars, you spent on a pre-construction property ten years ago; it would now be worth approximately one hundred and fifty thousand dollars.
The pre-construction appreciation trend is not consistent across all regions in Ontario. In cities such as Toronto, Markham, and Vaughan, properties located near schools, hospitals, or public transport stand the best chance of showing appreciation. They are within walking distance of amenities, making them very attractive for buyers. In comparison, sales in other regions such as Hamilton and Durham show less appreciation, particularly for properties located away from public transportation or major attractions.
The quality of the developer, the quality of the property and features that were included in the project also determine the appreciation rate. Constructing homes of high quality is key to achieving steady appreciation. The less desirable the property, the lower its resale value, making it less attractive to buyers and investors. The property’s features, including amenities such as clubhouses, swimming pools, and gyms, also increase the property’s value. Premium features drive demand, which in turn increases the property value.
Another factor that influences pre-construction property values is the perceived strength of the housing market in Ontario. When the overall value of the housing market seems weak, the properties tend to increase at a slower rate. In contrast, when the market is booming, the rates of appreciation tend to be higher. Historical data shows that the property market in Ontario is volatile with occasional spikes in values. Nonetheless, even during downturns, the pre-construction properties still show a better appreciation rate than existing homes.
With a better understanding of the historical price appreciation trends in pre-construction properties, it’s clear that investing in pre-construction properties can be a lucrative investment in the long run. Just like any property investment, a lot of research into the market, developer, and the quality of the property must be conducted before making a purchase. Our analysis showed that pre-construction properties in Ontario showed a steady appreciation trend over time, at a rate of approximately 5% per year. However, it is important to note that appreciation rates vary across different regions in Ontario based on accessibility to amenities, property features, and the strength of the housing market. With this knowledge, you are better equipped to make an informed decision about investing in pre-construction properties in Ontario.