Real Estate

Interest rate cuts could soon diminish real estate investment opportunities in Ontario


Published March 22, 2024 at 5:47 pm

Real estate investment opportunities across the GTA and Ontario, such as the purchase of a new condo, could diminish soon due to interest rate cuts.

The Bank of Canada has indicated that it will cut its overnight lending rate three to five times this year. It’s a certainty that condominium prices will start increasing immediately after the first announcement, says Diane Bertolin, partner at Alliance United Corporation, a developer with over 30 years of collective experience.

The central bank’s rate cuts will likely begin in June. If five cuts do indeed occur, that will most likely bring its overnight lending rate to 3.75 per cent — which also means that condo prices could start increasing as early as July, making now the ideal time to purchase a condominium.

“There’s an inverse relationship between interest rates and condo pricing because vertical homes are the affordable alternative to single-family homes, which sell for more than $1 million, in the Greater Toronto Area. That means, according to historical trends, condo prices will increase as interest rates reduce,” Bertolin said.

Diane Bertolin, partner at Alliance United

Canada’s central bank had previously cut its policy rate in the wake of the 2009 recession to around 100 basis points, and then lowered it even more to 0.25 per cent as soon as the COVID-19 pandemic shut down the economy.

However, there have been 10 rate increases over the past 24 months, bringing the bank’s overnight lending rate to five per cent.

The imminent rate cuts mean now is the best time for investors to consider purchasing a condominium. One such opportunity is the highly anticipated Bronte Lakeside Residences, a six-storey, 203-suite mid-rise condo building coming to Oakville’s waterfront Bronte neighbourhood.

The new condominium is currently in the pre-construction phase, meaning the units are now priced lower than they’ll ever be once construction begins.

The condominium represents an investment opportunity, especially as the GTA remains one of Canada’s most sought out places to rent. Oakville in particular has seen a lot of young couples and single professionals move in over the past several years.

The town’s charming Bronte neighbourhood, just steps away from the waterfront, has proven to be a hit with empty nesters who had been homeowners for decades and now want to enjoy a simple, low-maintenance lifestyle in retirement or semi-retirement. Many of the area’s renters are also single empty nesters who have no desire of once again becoming homeowners.

There are several reasons that Bronte has been attracting many new residents recently: its abundance of nearby shops and restaurants, popular landmarks, the recreational aspect associated with living close to the lake, and Oakville’s generally strong economy, to name just a few.

The location’s appeal is expected to help investors capitalize on a strong rental market by commanding exceptional rates, all the while capitalizing on a mortgage market that’s moving in the right direction.

Those interested in more information and updates on this project can register here.

Alliance United is a developer with over 30 years of collective experience developing low, mid, and high-rise real estate. They pride themselves in delivering high-quality, functional living spaces with all the superlative finishings that are often found in luxury builds.

For more information and the latest updates on the Bronte Lakeside Residences, visit their website, Facebook and Instagram pages.

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