The majority of Canadians aspiring to buy a home say they will push their plans to next year or later to wait for interest rates to drop, a new survey shows.
Bank of Montreal says 72% of respondents hoping to buy a home will wait until borrowing costs fall — an increase of 4% compared with last year.
The Bank of Canada is widely expected to begin cutting its key lending rate in the second half of the year. BMO Capital Markets senior economist Robert Kavcic said this should pull some demand off the sidelines and firm up the housing market.
“But rates have a long way to fall still before affordability is restored to recent norms,” he said in a release on Monday.
Other financial concerns such as inflation and the high cost of living are also holding many back from buying homes this year, the BMO survey suggested.
The survey of 2,500 respondents was conducted by Ipsos from Feb. 28 to March 18.
While 62% of respondents believe owning a home is one of their biggest aspirations in life, more than half think it is unattainable amid the financial strains and economic conditions.
The survey also shows 85% of respondents say they’re making real financial progress toward buying their first home but face financial anxiety. Among the top concerns were unexpected expenses, climate considerations such as wildfires and the high costs of homeownership.
Despite the economic and market challenges, many young Canadians are preparing to embark on their homebuying journey and enter the real estate market for the first time, said Hassan Pirnia, BMO’s head of personal lending and home financing.
This report by The Canadian Press was first published April 29, 2024.
Companies in this story: (TSX:BMO)
