(February 1 – 10:00 ET) – Royal Bank’s homeownership survey indicates that 20% of Canadians say they intend to buy a home in the next two years. That’s down from last year’s high of 25%.
Despite this slip in buying intention, the housing market will continue to be a strong area of economic activity, according to RBC senior economist Carlos Leitao. “Canada continues to post new highs for homeownership levels. Moving forward, we expect to see the effect of moderately higher lending rates pushed back by strong consumer confidence and a rapidly improving job market,” he says.
RBC’s survey says the 18-to-34 year age group is most likely to buy. Twenty-nine percent are very or somewhat likely to buy over the next two years. Alberta is expected to be the strongest province.
“When you consider the increasing competition for investment dollars, it’s encouraging to note there’s been a five percentage point increase in the number of people who believe buying a home or condo is a good investment (from 72% last year to 77% this year),” says Paul Bimm, senior manager of residential mortgages at RBC.
However, homeowners are becoming more tentative bout borrowing against their homes. The survey found 22% would consider borrowing against their home equity, down from 27% last year. The biggest reason to borrow was for investments (25%) followed by renovations (15%) and emergency needs (13%).
Interest rates seem to be the biggest factor affecting intention. “Rate increases in the United States provide a barometer for affordability changes in Canada,” said Leitao. “Higher than expected rates in the United States would inevitably spill over in Canada even if we are not feeling the same inflationary pressures.”
The survey was conducted by the Angus Reid Group based on 1,350 phone interviews with Canadian adults that took place December 4 -12, 1999.
-IE Staff