Number of prospective Canadian homeowners drops by a record 12 per cent
According to an annual survey by the Royal Bank of Canada, the number of people willing to buy houses in the next two years has gone down despite confidence in real estate remaining strong.
The survey, which is conducted every year, came with results showing that 15 percent of the people were willing to buy a house in the coming two years. Compared to last year, when the number was 27 per cent, there is a 12 per cent drop, which is the largest, recorded in the 20 years of this survey.
The same survey showed that 84 per cent of the people who polled believed that real estate remains a good investment and over half of them said that now is a good time to invest in real estate.
According to Royal Bank of Scotland’s senior vice-president of Home Equity Financing, Amato-Gauci, “The more cautious mood this year is not surprising and is consistent with broader economic and industry forecasts.”
“An unseasonably warm spring, low rates and anticipation of mortgage rule changes may have led many Canadians to move forward their home purchases in the first half of 2012,” he went on to add.
Moreover, 49 per cent of the people surveyed expected the mortgage rates to remain unchanged by next year, while 43 per cent felt that home prices will go up. 40 per cent of the people who said they will be buying a house in the next two years were those who will be getting their first mortgages.
“Our findings suggest confidence in the housing market is still high and young Canadians are the bright spot as they look to buy their first home and seek the advice to do it right,” Amato-Gauci further stated.
Furthermore, out of the people who expressed interest in buying, 59 per cent believed that a five per cent down payment would not have much of an impact, while 56 per cent felt that the shortened maximum amortization period (reduced last year from 30 to 25) will have some effects. Around three-quarters of the people also believe that changes in government mortgage rules will negatively affect prospective buyers, but other survey results show that this is merely speculation.
Ipsos Reid carried out the survey for the Royal Bank of Canada from January 31 to February 8 and took responses from 3,005 randomly selected Canadian adults. The accuracy of the survey is thought to be within three percentage points and 19 out of 20, but regional results are affected by the small size of samples.
