Many Canadians are putting off buying a home in current economy: survey

Amid high inflation and rising interest rates, a new survey says nearly one in five Canadians is putting off buying a home.

The online survey, conducted by Royal LePage and Leger, included 1,565 Canadians. Of those surveyed, 19 percent said cost of living pressures and higher interest rates have caused them to postpone or prioritize home buying since early 2022.

According to the survey, 28 percent said their plans were unaffected, while 54 percent said they had no plans to buy a home this year.

But among Canadians between the ages of 18 and 34, 29 percent said they plan to delay or prioritize home buying. Of younger Canadians surveyed, 31 percent said their plans to buy a home had not changed, and 40 percent said they had no plans to buy a home this year.

“About half of the 18-35 age group (who wanted to buy a home) hasn’t been affected by what we’ve seen in the market and around the world lately in terms of increased costs,” Royal LePage COO Karen Yolevski said on Tuesday to CTV News Channel.

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“However, the other half was affected. They’re the ones saying that for now, they’ll either postpone the transition period and see how things play out in terms of the market and affordability, or they’re going to delay their plans indefinitely.”

In September, the Bank of Canada raised its overnight interest rate for the fifth time, by 75 basis points to 3.25 percent. Many economists are predicting that the central bank could introduce another rate hike this month. The annual inflation rate also slowed to 7.0 percent in August, mainly due to falling gas prices.

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But those who are putting off buying a home may benefit from lower prices as rising interest rates continue to cool the housing market. An analysis by RBC last month said house prices are unlikely to bottom until next spring.

In August, the average home price in Canada was 3.9 percent lower than in the same month last year. In some communities, home prices are down as much as 24.5 percent from February’s highs.

“We have seen interest rates rise over the past few months. This has been accompanied by a drop in prices from the highs we saw in February, particularly in our major urban centers,” Yolevski said.

As house prices fall, higher interest rates have meant that mortgages have become far more expensive, particularly for those who own adjustable rate mortgages.

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“We believe these buyers will simply take a step back and see what is going to happen in the market, reassess their affordability and their finances to ensure they are getting the property they can afford and relate to feel comfortable on their monthly payments,” she added.

In addition, Yolevski noted that Canadian cities continue to face housing shortages, particularly as immigration to Canada continues to increase. The Canadian Mortgage and Housing Corporation estimates that an additional 3.5 million homes will need to be built by 2030 to make housing affordable.

“We know that we have a chronic and critical shortage of offers in the housing market. So it will not create an environment where there is a shortage of housing for those who are looking for it,” she said.

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