With inflation high and interest rates rising, a new survey found nearly one in five Canadians say they are 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 led them to postpone or prioritize buying a home from early 2022.
According to the survey, 28 percent said their plans weren’t affected, while 54 percent said they had no plans to buy a home this year.
But for Canadians aged 18 to 34, 29 percent said they planned to delay or deprioritize buying a home. Of the youngest Canadians surveyed, 31 per cent said their plans to buy a home have not changed and 40 per cent said they have no plans to buy a home this year.
“About half of the people in the 18-35 age group (looking to buy a home) have been unaffected by what we’ve seen lately in the market and the world alone in terms of rising costs. “, said the director of operations of Royal LePage. Karen Yolevski told CTV News Channel on Tuesday.
“However, the other half has been affected. They are the ones who say that, for now, they are going to delay the interim period and see how things go in terms of the market and affordability, or they are going to delay their plans indefinitely” .
In September, the Bank of Canada raised its overnight lending rate for the fifth time by 75 basis points to 3.25 percent. Many economists predict that the central bank could introduce another rate hike this month. The annual inflation rate also slowed to 7.0 percent in August, largely due to falling gas prices.
But those putting off buying a home can take advantage of lower prices, as rising interest rates have continued to cool the housing market. RBC analysis last month said house prices probably won’t bottom out until next spring.
In August, the median home price in Canada fell 3.9 percent from the same month last year. In some communities, home prices have seen declines of as much as 24.5 percent since peaks in February.
“We have seen an increase in interest rates in recent months. With that came a decline in prices from the spikes we saw in February, particularly in our large urban centers,” Yolevski said.
While home prices are falling, higher interest rates have made mortgages much more expensive, especially for those with variable-rate mortgages.
“We think those buyers are simply stepping back and seeing what’s going to happen in the market, reassessing their affordability and their finances to make sure they’re getting the property they can afford, that they’re comfortable with, in terms of their monthly payments, she added.
On top of that, Yolevski noted that housing shortages persist in Canadian cities, especially as immigration to Canada continues to increase. The Canadian Mortgage and Housing Corporation estimates that an additional 3.5 million homes must be built by 2030 to make housing affordable.
“We know that in the housing market we have a chronic and critical shortage of supply. So it’s not going to create an environment where there is a shortage of homes available to those looking for them,” he said.