The unstable housing market of Canada, the rising rates of interests, and the unpredictable economic outlook are causing prospective Canadian home buyers to put their purchasing plans on hold. Scotiabank conducted a survey in which approximately half (43%) of the respondents revealed that they are putting their home buying plans on hold. This is an increased from 22% in 2021 and 20% in 2020.
Moreover, participants between the age of 18-34 highlighted that the rising interest rates were the reason causing them to reevaluate their home buying plans. John Webster of Scotiabank said, âItâs no surprise that a perfect storm made up of the rising cost of living, housing supply shortages, and increased demand has caused Canadians to feel like homeownership is out of reach. Itâs important that Canadians know that theyâre not alone. Many others are going through the same thing, and itâs why more people are looking for sound advice from a trusted sourceâ.
Another interesting aspect revealed in the survey was that many Canadians are more concerned about the rising rates of goods and services because of inflation rather than worrying out about rising interest rates. In February, headline inflation came in at a 30-year high of 5.7%.
A significant portion of Canadians (96%) revealed in the survey that housing accessibility is a major issue for them because the average home price in Canada has reached $816,720. Moreover, according to data from Home Ownership in Canada, 9 out 10 Canadians feel that they are locked out of ever owning a home because of fluctuating market conditions.
âRising home prices have outpaced wages, making it impossible for Canadians to get ahead. And with rising interest rates and inflation, the affordability gap is tougher than ever to close.â, said co-founder and CEO Rob Richards. Nevertheless, the desire of homeownership remains strong amongst Canadians despite the affordability hurdle being perceived.
Furthermore, Mortgage Professionals Canada also published their research in which it was revealed that approximately a third of non-owners still expect to purchase a primary residence within the next two years. That percentage rises to 36% for those aged 25 to 34.
Although pandemic restrictions within Canada are easing and employees are returning back to their jobs, the market conditions are motivating Canadians to purchase houses far from major cities in order to get more for their money (25% in 2022 versus 29% in 2021). Subsequently, this aspect is more common amongst younger Canadians as 49% are considering moving out of their city to get more âhouseâ for their money.
Because of the current market conditions, many homeowners are prioritising renovations rather moving to new locations.
- When compared to the last two years, fewer people are planning to purchase a new home to live in (15% in 2022 versus 17% in 2021 versus 18% in 2020).
- Most homeowners (59%) are planning to upgrade their current home within the next two years, 15% are planning to buy a new home by selling their current home, and 10% are planning to buy an investment property.