The Niagara Region, located in the Golden Horseshoe region of Southern Ontario, is home to just under half a million people—a number that’s forecasted to rise. Niagara’s population grew by close to 40,000 persons between 2007 and 2019, with the most concentration in St. Catharines (roughly 141,000) and Niagara Falls (roughly 95,000). Owing to its prime location, bordering the United States, as well as its repute for being one of Canada’s largest tourist hubs, real estate in the Niagara Region has been a sound place to invest in for some time.
In recent years, a growing number of first-time buyers and new Canadians looking to own their first homes are settling in the region, as cost of living in the City of Toronto becomes increasingly unaffordable.
This article delves into the fundamentals of Niagara’s economy, including its reliable tourism sector and ongoing infrastructure projects, and how these factors drive the strength of the region’s real estate market, particularly its hot rental segment.
A strong tourism sector
Niagara Falls and its surrounding attractions bring in more than 30 million tourists every year. On average, tourism brings in $1.2 billion annually. In spite of travel bans ensued by COVID-19, Niagara has remained a popular vacation destination for Canadians throughout these unprecedented times. Since entering Stage 3 in July, the region has already seen an uptick in visitors, according to the Niagara Parks Commission.
Continued economic development
In addition to improved GO Train and Via Rail service in the area, the Niagara region is in the midst of several important infrastructural developments. For instance, the planned $10-million reconstruction of Drummond Road, slated for 2026.
To add, Niagara Region Public Health opened a new 21,500-square-foot facility last year. The new hospital replaced an existing facility that was only a third of the size. The centre offers improved health services as well as job, residency, and volunteer opportunities to residents of the region. Planning for a brand new state-of-the-art hospital has also commenced and construction is slated for as soon as the fall of 2022.
Lastly, and perhaps the most important, is the upcoming Niagara Falls Renewable Natural Gas plant, which is expected to be completed by the end of 2021. The $42 million facility will create jobs, stimulate regional economic development, and reduce greenhouse gas emissions in Canada. The Niagara Falls Renewable Natural Gas plant will be the largest of its kind in Ontario.
Growing demand in the rental segment
Demand for affordable rental properties in the region is high and steeply growing. The average cost of rent is $1,028, up 4 percent from last year, according to a Rental Market Report released this year. The same source cites that vacancy rates are at 2.3 percent. Low vacancy is just one indicator of a significant rental shortage in the region, particularly in the multifamily and rental segments.
According to a new policy brief published by Brock’s Niagara Community Observatory, anyone hoping to rent an affordable one-bedroom apartment from Niagara Regional Housing could be facing a wait-time of a decade or more. The BNCO’s brief also revealed that, as of 2019, St. Catharines was the 10th most expensive rental market in Canada.
Moreover, Niagara is expected to experience a population increase of 30 percent by 2041, bringing the total population to 609,990. This kind of growth will equate to more demand for housing. As such, the region will require an additional 19,325 units by 2041, or 870 units annually.
Upcoming housing supply
Niagara’s housing prices are rising faster than anywhere else in Canada. This is due to low historically low-interest rates coupled with high demand and lacking supply in the region. Given the steepening state of demand for housing, meaningful supply is underway in the region, including a recently-opened affordable housing building for seniors in Welland, a high-rise on Carleton Street in St. Catharines, and an upcoming 73-unit project on Hawkins Street in Niagara Falls. Several upscale condo developments are also underway in the region.
Further, according to a report via Statistics Canada, construction spending rebounded in the region in May. The same source cites that investments in non-residential buildings, such as offices and warehouses, increased by 65.6 percent in May compared to April 2020, and residential investments increased 57 percent during the same period.
When it comes to investing in real estate, choosing the right location is critical. That’s why it’s important to consider the economies (past, present, and future), of the markets you’re considering well before you invest. Historical and current data shows that Niagara boasts a resilient and growing economy. That, coupled with growing demand for housing, makes the region a promising place to invest your hard-earned-funds.