Numbers looking for a place to call home slip on waning economic confidence and affordability
LORI MCLEOD
Other
Canadian consumers are taking a more bearish outlook on the housing market, with home buying intentions slipping to their lowest level in years, according to a poll released yesterday by Royal Bank of Canada.
Flagging confidence in the economy coupled with the reduced affordability of housing appears to be giving potential buyers pause this year.
Across Canada, home buying intentions slipped by 5 percentage points year over year to 23 per cent, according to the Ipsos Reid poll. The number of respondents who said they were “very likely” to buy dropped from 9 per cent last year to 7 per cent in 2008, the lowest level since the poll was started 15 years ago.
“Considering the flurry of activity we’ve seen over the last few years, this year’s results definitely signal a change,” said Catherine Adams, vice-president of home equity financing at RBC.
The percentage of Canadians who said they were intending to buy a home within the next two years dropped everywhere but Quebec, where it increased to 21 per cent from 19 per cent. At 5 per cent, Atlantic Canadians had the lowest response when asked whether they were “very likely” to buy.
The most positive outlook for home prices came from Manitoba and red-hot Saskatchewan, with 65 per cent of respondents expecting a lift this year. Just 39 per cent of Alberta residents expect home prices to appreciate this year, the most bearish market in the poll.
“I think our experience last year has made us more realistic,” said Jim Sparrow, agent with Keller Williams Platinum Realty in Calgary. Home prices soared 21 per cent in the first half of 2007 in the city, but gave back half of that by year’s end, he said.
Mr. Sparrow said he expects home prices in Calgary, which he estimates are up 6.5 per cent year to date, to post a modest gain of 5 to 10 per cent this year.
Despite a more negative outlook, 85 per cent of poll respondents believe purchasing a home is a good investment. That’s down from 90 per cent in 2007.
A regional manager at one Canadian mortgage brokerage said there’s been little falloff in business for his brokers.
“We’ve probably seen the market slow down somewhat, but not a great deal,” said Rob Hafer, regional business leader at Invis Inc. in Victoria. “The Bank of Canada dropping interest rates is a good sign that should help feed the demand.”
The poll of 3,023 Canadians was carried out between Jan. 17 and Jan. 21, with results considered accurate to within plus or minus 1.8 percentage points, 19 times out of 20.
Changing attitudes
An RBC survey shows that confidence in the housing market is flagging.
How likely are you to purchase a home or another home within the next two years?
Very likely: 7%
Somewhat likely: 16%
Not very likely: 28%
Not likely at all: 49%
Total vote: 3,022
Thinking about this time next year, do you expect that each of the following will be higher, lower or the same as they are today?
MORTGAGE RATES
Higher: 46%
Lower: 23%
The same: 31%
Total vote: 3,023
Thinking about this time next year, do you expect that each of the following will be higher, lower or the same as they are today?
HOUSING PRICES
Higher: 56%
Lower: 23%
The same: 21%
Total vote: Total vote: 3,024
MAGGIE WONG / THE GLOBE AND MAIL
SOURCE: RBC
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