Numbers of first-time homebuyers dropping as home prices soar

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Numbers of first-time homebuyers dropping as home prices soar


The number of Canadians buying a home for the first time has dropped significantly over the past year, a new report shows.

A nationwide consumer survey conducted by the Canada Mortgage and Housing Corporation (CMHC) found that 47 per cent of mortgage purchases in 2019 were made by first-time homebuyers, which is down from 56 per cent the previous year.

The field study, which was conducted between March and May, polled nearly 1,400 first-time and repeat homebuyers from across the country. More than one third of respondents were from Ontario, while a quarter were from Quebec.

That the number of first-time homebuyers has decreased didn’t come as much of a surprise for Colette Kikongi, CMHC’s planning specialist and spokesperson. A number of factors, including housing affordability, played a role in making the number of qualified buyers go down, she said.

“Eighty per cent of the buyers said that being able to find a house that they could afford was a necessity for them,” said Kikongi, who noted home prices have been steadily climbing in markets such as Toronto and Vancouver over the past few years, making it harder for new buyers to break in.

“Affordability is the main concern. Also, we see in our data that half of the homebuyers are concerned about housing costs and home expenditure being too much. All that combined would probably explain why there is a decrease,” she added.

Home prices in the Toronto region are projected to climb even higher, with an average of $949,400 by 2021, according to another CMHC report released last month.

Still, results from the consumer survey showed most first-time homebuyers live in Ontario, and are between the ages of 18 and 34.

The survey also showed that newcomers to the market are taking their time before committing to home ownership, partly because of affordability, but also, partly, because they are being more careful about the commitment. The number of first-time homebuyers who were renting for more than 10 years before buying jumped from 22 per cent in 2019 to 31 per cent in 2019, according to the report.

Kikongi said this year also saw the number of buyers who spent the maximum amount they could afford to buy a home go down from 78 per cent in 2018 to just 60 per cent.

She said most respondents were aware of the mortgage stress rules the federal government expanded in 2018 to include both insured and uninsured borrowers. Curiously, more than 75 per cent of the people surveyed said the stress test had no impact on their decision to buy a home, she said.

“Something interesting that came out of the survey was that nearly two-third of the respondents said they felt this stress test will keep more Canadians from taking on a mortgage they can’t afford in the future,” said Kikongi.

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Indeed, the survey found that in 2019, over 60 per cent of homebuyers who were affected by the stress test reacted by buying a smaller or less expensive home within their means. That number stood at 47 per cent in 2018, according to this survey.

The overall takeaway from the survey, Kikongi said, is that there is still a healthy amount of consumer confidence in the housing market. Nearly 90 per cent of those surveyed said home ownership is a sound long-term investment, she said.

Gilbert Ngabo

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