Canada property market downturn ‘inevitable’

Despite being unaffected by the global credit crunch Canada is likely to see a downturn in its property market within the next year, it is claimed.

One reason is that a large number of Canadians work for companies based in the United States. Secondly the two economies are too closely related for there to be no Canadian downturn whatsoever, says Elton Ash, executive vice president with RE/MAX Western Canada.

But he believes luxury real estate will remain insulated from any woes. 'It's a separate market that drives itself,' says Ash. 'And right now, demand for high-end real estate, especially lakeshore property, is huge.'

The hottest spots include Muskoka, Kelowna and the home of the 2010 Winter Olympics, Whistler.

Just two hours north of Toronto, Muskoka has proved a popular spot for Hollywood's elite, including Steven Spielberg, Tom Hanks and Goldie Hawn, who all own property there. Limited shorefront property attracts the moneyed from the entertainment, banking and media industries, as does the short distance from busy city life.

The place with a bit more activity, and equal glitz, is Whistler. Whistler and Blackcomb mountains are regarded by some as the best slopes in North America. And much like its counterparts in the Colorado Rockies and European Alps, Whistler is also a playground for high society. Christie's Great Estates, which houses a luxury real estate database on its website, currently lists properties ranging from $2.25 million to $18 million.

Kelowna, on the other hand, is a little more homegrown. On the Okanagan Lake in Okanagan Valley, the area draws property investors from around the world with skiing, hiking, vineyards and wineries. Many even call it the "Florida of Canada," thanks to its lush, diverse countryside with both pine trees and cacti. The area attracts boating and water-sport enthusiasts with seaside homes starting at $1 million.

Other areas with a limited amount of luxury real estate (but a lot of buzz) include the west coast of Newfoundland and St. Andrews by the Sea, Nova Scotia, which is seeing increasing traffic from the UK and Ireland, according to Christine Martysiewicz, a spokeswoman for Re/Max.

Although most homes in these areas don't reach $1 million US in price, they're attracting attention from European investors who recognize the value. Most of the homes are right on the water, and job opportunities are growing. There is nearly $10 billion in combined capital works projects pending for Newfoundland and Labrador's Avalon Peninsula.