Many Canadians are putting off buying a home in current economy: survey
With high inflation and rising interest rates, a new survey has found nearly one in five Canadians say they're putting off buying a home.
The online survey, conducted by Royal LePage and Leger, included 1,565 Canadians. Of those who were surveyed, 19 per cent said the cost-of-living pressures and higher interest rates led them to either postpone or prioritize purchasing a home since the start of 2022.
According to the survey, 28 per cent said their plans were not impacted while 54 per cent said they had no plans to purchase a home this year.
But for Canadians 18 to 34, 29 per cent said they were planning to delay or deprioritize homebuying. Of those younger Canadians surveyed, 31 per cent said their plans to buy a home have not changed and 40 per cent said they did not have plans to purchase a home this year.
"About half of those in the 18 to 35 age group (who were looking to buy a home) have not been impacted by what we've seen lately in the market and just in the world in terms of increased costs," Royal LePage COO Karen Yolevski told CTV News Channel on Tuesday.
"The other half though, they have been impacted. They are the ones that are saying that for now, they're either going to delay in the interim period and see where things go in terms of the market and affordability, or they're going to delay their plans indefinitely."
In September, the Bank of Canada increased its overnight lending rate for a fifth time by 75 basis points to 3.25 per cent. Many economists predict the central bank could introduce another rate increase this month. The annual inflation rate also slowed to 7.0 per cent in August, largely due to the falling gas prices.
But those who put off buying a home may get to take advantage of lower prices, as the rising interest rates have continued to cool the housing market. Analysis from RBC last month said housing prices likely won't bottom out until next spring.
In August, the average price of a home in Canada was down 3.9 per cent from the same month last year. In some communities, home prices have seen declines of up to 24.5 per cent from February peaks.
"We've seen an increase in interest rates over the past several months. With that came a decline in pricing from the peaks we saw in February, particularly in our large urban centres," Yolevski said.
While home prices are going down, higher interest rates have caused mortgages to become far more expensive, especially for those holding variable rate mortgages.
"We feel that those buyers are simply stepping back and seeing what's going to happen in the market, reassessing their affordability and their financials to ensure that they get the property that they can afford, that they feel comfortable in, in terms of their monthly payments," she added.
On top of that, Yolevski noted a shortage of housing in Canadian cities continues to persist, especially as immigration to Canada continues to rise. The Canadian Mortgage and Housing Corporation estimates that an additional 3.5 million more homes need to be built by 2030 to make housing affordable.
"We know in the housing market is that we have a chronic and critical shortage of supply. So, it's not going to create an environment where there is a dearth of homes available for those that are looking for them," she said.
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