Nearly one third of younger Canadians have had to postpone or deprioritize buying a home since the beginning of the year, according to a new survey.
The survey, commissioned by Royal LePage and conducted by Leger, asked 1,565 participants if “the increased cost of living, including higher interest rates and inflation,” caused them to “postpone or deprioritize the purchase of a home since the beginning of 2022.”
Twenty nine per cent of respondents between 18-34 answered ‘yes,’ while 31 per cent responded ‘no’ and the remaining 40 per cent said they had no plans to purchase a home since 2022 began.
“A large portion of homebuyers have moved to the sidelines since the cost of borrowing began its rapid increase in March,” Karen Yolevski, Chief Operating Officer of Royal LePage Real Estate Services Ltd, said in a press release. “Everyday expenses have gone up, and compared to periods of pandemic lockdown, Canadians are saving less and spending more money on services today, including travel and entertainment.”
The bank of Canada has increased its target for the overnight lending rate from 0.25 per cent to 3.25 percent so far this year, significantly inflating the cost of borrowing.
This has in turn led to a drop in housing prices nation-wide over the past six months, with RBC previously warning of a historic housing correction.
However, the higher interest rates have made it more difficult to qualify for a mortgage, which is already a challenge for young and first-time home buyers, experts say.
The latest data provided by the Toronto Region Real Estate Board suggests that the average selling price for all home types combined in September was still up by 0.9 per cent year-over-year to $1,079,500.
Meanwhile, many economists predict that Canada is headed towards a recession in 2023.
David Doyle, the head of economics at Macquarie Group, an Australia-based global financial services provider, told BNN Bloomberg that the cooling housing market and rising inflation are signs that a recession is “almost inevitable.”
“Typically, you see housing start to weaken as you head into a recession,” Doyle said. “We’re certainly seeing ample signs of that.”
It isn’t just young people who have changed their plans when it comes to buying a home this year.
Nineteen per cent of all survey respondents answered ‘yes’ to the survey question, however more than half of all respondents (54 per cent) said that they had no plans to purchase a home since the beginning of the year.
Yolevski says that in Toronto, one of the most expensive markets in the country, part of the sidelined demand for home-buying is putting increased pressure on the rental market, which many housing critics say is already stretched-thin.
“However, many of those buyers are expected to return to the market once interest rates stabilize and buyer confidence is regained,” Yolevski added.
The survey was conducted between Sept. 9 and 11 via a web panel. No margin of error can be associated with a non-probability sample, such as a web panel.
