The Diverging Paths of Canada’s Pre-Sale Condo Markets
As housing affordability continues to dominate Canada’s political and economic landscape, pre-sale condos remain a popular option for investors and homebuyers alike. However, the Vancouver, Calgary, Toronto, and Montreal markets reveal stark differences shaped by regional regulations, taxes, and market dynamics.
While the media tends to draw a solid line between people who live in their homes and investors, in reality, everyone who owns a property is an investor. The difference is that some people live in their investments.
These differences significantly influence each city’s buying experience and potential returns, offering investors distinct opportunities—and risks—depending on where they choose to invest.
Since real estate agents are typically local and specialise in a specific city, they usually aren’t equipped to provide advice across cities, provinces, and countries.
Why is this Comparison Important?
Comparing city property markets is crucial for professionals considering a job promotion and for investors seeking the best returns.
Job seeker or employee evaluating an offer or promotion in a new city.
Of course, the role and compensation package are front and centre, but relocating often involves significant shifts in housing costs and the returns on your property investment. Understanding these differences helps individuals assess whether their new salary will sustain their lifestyle in a pricier market and the impact on their property investment returns, impacting decisions around accepting or declining promotions.
Property Investors seeking the best investment returns.
For investors, the total return over the life of the investment is key. They should look at:
The price—if you can’t afford to buy in the market, the potential returns are a moot point. Spend your time researching markets where you can afford to invest,
The price–to–rent ratio—a simple way to get a rough estimate of return on investment, but since transaction taxes vary widely between cities and provinces, it is not the only metric.
Property Purchase Taxes—Some cities have property transfer taxes, while some provinces don’t. Sales taxes are substantial and vary between regions.
Tenancy regulatory differences—are more tenant-friendly, which is fine when you have a good tenant, but some bad actors abuse the system at the expense of well-intentioned landlords.
Becoming a landlord is a simple decision. However, becoming a landlord with a high-performing property portfolio that provides stable and reliable returns is more complicated.
The Tax Equation: A Regional Patchwork
One of the most striking differences across these markets is the tax burden, with each city presenting unique challenges for pre-sale condo buyers.
In Vancouver, buyers of new condos face 5% GST and 2% Property Transfer Tax on the purchase price. For non-resident buyers, the 20% foreign buyers’ tax adds a significant disincentive to foreign investors. These measures have been put in place to cool Vancouver’s ultra-expensive housing market. For a typical condo apartment in Vancouver, excluding the foreign buyer tax, the tax bill would be $50,000.
Because Alberta has no provincial sales tax (PST) and no property transfer tax, Calgary is particularly appealing from a tax perspective. Buyers still face 5% GST on new condo purchases, but Alberta remains one of the most tax-friendly provinces for real estate investment. The tax bill would be $17,500 for a typical benchmark-priced apartment in Calgary—less than half the tax burden of Vancouver.
Toronto is home to one of Canada’s most expensive tax regimes, where buyers must pay 13% HST on new condo purchases. In addition, Toronto’s dual provincial and municipal land transfer taxes further inflate the cost of buying a pre-sale condo. Foreign buyers face a 25% foreign buyers’ tax designed to reduce speculative activity and address housing shortages. For a typical condo apartment in Vancouver, excluding the foreign buyer tax, the tax bill would be $100,000 — double Vancouver’s tax burden and five times Calgary’s transaction taxes.
In Montreal, new condos are subject to 15% sales tax (5% GST + 9.975% Quebec Sales Tax), making it the higher among the cities considered, similar to Toronto. Quebec’s Welcome Tax (a property transfer tax) is structured similarly to Vancouver’s, with 1.5% on the first $250,000, 2% up to $500,000, and 3% on the portion exceeding $500,000. Notably, Montreal does not impose a foreign buyers’ tax, though Quebec’s anti-speculation measures attempt to curb excessive flipping and speculative buying. A benchmark Montreal condo costs $400,000, so the combined tax rate would be 17% or roughly $69,000. The rate is approximately the same as in Toronto, but the tax burden drops since property prices are much lower.
Calgary has the most significant advantages for transaction taxes.
Homeowner Warranties and Consumer Protections
When it comes to homeowner warranties, provincial rules again come into play.
In Vancouver, new condos come with a 2-5-10 warranty, providing coverage for defects in materials and labour for 2 years, building envelope issues for 5 years, and structural defects for 10 years. This is one of the most robust warranty systems in Canada.
Calgary follows Alberta’s 1-2-5-10 warranty, offering similar protection but with 1-year coverage for materials and labour and 2 years for major systems. This slightly reduces the buyer protection relative to BC.
In Toronto, buyers benefit from the 1-2-7 Tarion warranty, which offers 1-year coverage for defects and materials, 2 years for major systems, and 7 years for structural defects. Tarion is considered somewhat less comprehensive than BC’s 2-5-10 system but still provides adequate protection.
Montreal operates under Quebec’s GCR (Garantie de construction résidentielle) program, which offers a 1-5-5 warranty—1 year for materials and labour, 5 years for building envelope issues, and 5 years for structural defects. While slightly less comprehensive than BC’s warranty, it remains in line with most other provinces.
British Columbia has the most significant warranty protections for new home buyers.
However, a warranty is a cold comfort if your home needs to be gutted to fix a structural issue, even if the warranty pays for the repairs. A well-established and reputable builder who specialises in higher-quality builds might make the warranty a less critical consideration. You often get what you pay for.
Price and Rent Gaps: The Market Dynamics
The pricing of pre-sale condos in Canada’s major cities reflects the broader economic forces at play in each region.
In Vancouver, pre-sale condos for a one-bedroom unit command a premium, with prices ranging from $750,000 to $850,000. Rents for these units typically range between $2,500 and $3,000 per month, reflecting the city’s status as one of the world’s least affordable places to live. The price-to-rent ratio is 24 to 25. In other words, the price is 25 times the value of the rent collected in a year.
Read: Vancouver Market Trends and Price Forecast
Calgary, by contrast, remains a beacon of affordability. One-bedroom pre-sale condos are priced around $300,000 to $350,000, with monthly rents averaging $1,500 to $2,000. Though the city offers lower appreciation potential, its affordability makes it a solid entry point for first-time buyers. The price-to-rent ratio is 15 to 17.
Read: Calgary Market Trends and Price Forecast
In Toronto, pre-sale one-bedroom condos are priced between $600,000 and $750,000, with rents ranging from $2,200 to $2,800 monthly. Though prices have softened due to rising interest rates, Toronto’s condo market remains robust and competitive. The price-to-rent ratio is 22 to 23.
Read: Toronto Market Trends and Price Forecast
Montreal, meanwhile, represents one of Canada’s last relatively affordable big-city markets. One-bedroom pre-sale condos are priced between $400,000 and $500,000, with rents around $1,800 to $2,200 monthly. Though Montreal’s condo market has seen rapid appreciation in recent years, it remains a more affordable alternative to Toronto and Vancouver while offering growth potential. The price-to-rent ratio is 19 to 20.
Read: Montreal Market Trends and Price Forecast
Calgary has the most favourable price-to-rent ratio among the four cities. For each dollar invested, Calgary generates the most revenue. Nearly double Vancouver’s revenue per dollar invested.
Carrying Costs: Property Tax and Power
The cost of owning property and running a household varies considerably across Canada’s major cities, driven by differences in property taxes and electricity prices.
In Vancouver, property taxes are relatively low compared to national standards—around 0.27% to 0.31% of the assessed value—but homeowners face significantly higher housing prices, which mitigates the benefits of lower tax rates.
British Columbia’s electricity costs are among the country’s lowest, thanks to the province’s abundant hydroelectric power. This keeps utility bills manageable despite Vancouver’s high real estate prices. The average BC Hydro bill for a person living in an apartment or condo is around $43 per month, compared to a single-family home, where the average monthly bill is $103.
Calgary stands out with its property tax rate of around 0.74%, higher than Vancouver’s but still moderate compared to other Canadian cities. Based on a benchmark condo price of $350,000 in Metro Calgary, the homeowner would have a tax bill of $2,590. This is higher than Metro Vancouver on a per-unit basis, but perhaps Calgary has much higher snow-clearing and road repair costs due to more frigid winters.
Electricity costs in Calgary can also be volatile due to the province’s reliance on natural gas and deregulated energy markets, often resulting in higher utility bills than in Vancouver or Montreal. The cost of electricity in Calgary varies depending on factors such as consumption, property size, and the provider. On average, residents can expect to pay between $60 and $100 monthly for electricity, with higher usage during peak heating or cooling seasons.
Toronto’s property tax rate of approximately 0.67% appears to be in the middle ground between Vancouver and Calgary. However, taking a benchmark price of $650,000 for a condo apartment, the annual property taxes would be $4,355. Overall, Ontario has a higher property tax burden on households than Alberta and B.C.
Ontario’s electricity rates, driven by a mix of nuclear, hydro, and natural gas power, are among the highest in the country. Homeowners face substantial utility bills, particularly in peak seasons.
Property taxes hover around 0.80% in Montreal, one of the highest among major cities, but housing remains relatively affordable. A benchmark prices apartment costs roughly $400,000, so the annual tax bill should be $3,200.
Quebec’s electricity rates, however, are the lowest in North America, thanks to its vast hydroelectric resources. This keeps household utility costs far below the national average, offering Montreal homeowners a distinct advantage in terms of monthly expenses.
Ontario is the least favourable province in terms of carrying costs.
Looking Ahead
The pre-sale condo markets in Vancouver, Calgary, Toronto, and Montreal offer a fascinating study of regional contrasts shaped by varying tax regimes, regulations, and economic conditions. Vancouver remains a high-cost, high-barrier market for buyers and renters, dominated by luxury pricing and heavy foreign buyer penalties. With its affordability and light tax burden, Calgary is a prime destination for cost-conscious investors. Toronto, though highly taxed and regulated, strikes a balance between strong rental yields and long-term appreciation. Montreal offers a unique blend of affordability and growth, with fewer tax burdens on foreign buyers, making it an increasingly attractive alternative to the more established markets.
Understanding these differences is crucial for those navigating Canada’s pre-sale condo landscape. As housing policy and market dynamics continue to evolve, the divergence between these cities may widen, presenting challenges and opportunities for real estate investors across the country.
However, this doesn’t consider potential and forecast future increases in property value. For that, we need to look at Mortgage Sandbox’s forecasts and analysis of the five key factors driving home values in Canada.
