Millennials to lead the charge in a future surge of home purchases
The results of a fresh study conducted by Royal Bank of Canada showed that fully 32% of Canadians are likely to buy a home in the next two years (up by 7% from last year), with millennials comprising a clear majority of this purchase-intention cohort.
The annual RBC Home Ownership Poll found that 50% of millennials (those aged 18 to 34) expressed the strongest desire to buy homes in the near future. RBC pointed at resurging confidence in the economy and employment as the main motivators for boosted home purchase intentions among Canadians.
With the increased financial pressure brought about by the latest Stress Test Guidelines issued by the Office of the Superintendent of Financial Institutions (OSFI) for uninsured mortgages, 55% of respondents indicated that the revised rules are affecting their purchase decisions. These include making higher down payments (25%), delaying home purchases (19%) or buying a less expensive, smaller home or a less expensive one in a different location (18% each).
“Canadians continue to feel optimistic about getting into the housing market despite changes in government regulations. They’re taking a more informed journey to home ownership by starting with affordability,” according to Nicole Wells, vice president for Home Equity Financing, RBC.
“With the right tools and a detailed roadmap that navigates the journey, Canadians are better prepared to make one of the biggest decisions – and it’s based on facts, not emotions.”
84% of millennials expressed confidence in purchasing a home as a “very good or good investment”, compared to 79% in 2017. Millennials are also feeling less anxiety about employment (36% vs. 47% in 2017) and less uncertainty about the economy (19% vs. 28% in 2017).
Furthermore, 35% of Canadians indicated in the poll that they had received, or would be receiving, financial assistance from their families for their down payments. Meanwhile, 36% are planning to do it on their own with a dedicated savings account.
On the other hand, 61% are very or somewhat concerned about interest rate increases, going up by almost 10% from last year. 35% are thinking about buying a home sooner because of current low-interest rates, while another 32% were also thinking of doing so because of a potential increase in interest rates.
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