RBC survey indicates potential slowdown in home buying
A change is going to come, homeowners likely to sit tight
TORONTO, March 6, 2006 — With
buying intentions at their lowest level since 2000, a new
RBC study indicates a potential change in the Canadian home
buying landscape.
According to RBC Royal Bank's 13th Annual Homeownership Survey,
overall intentions to buy a home in the next two years remain
the same as 2005 at 29 per cent. However, the market could
be softening with those who are "very likely to buy"
at 10 per cent. This is down from 13 per cent last year and
is the lowest it has been in over five years. Additionally,
the number of Canadians who expect to purchase a home in the
next six months now sits at eight per cent, down from 10 per
cent last year.
"This year's results are a definite change from what
we witnessed over the last five years," said Catherine
Adams, RBC Royal Bank's vice-president, Home Equity Financing.
"The intention to buy is still evident, but the intensity
to do so is nowhere near as great."
While the change in outlook could be due to a natural slowing
from recent record home-buying seasons, combined with an exhaustion
of pent-up demand by previous first-time buyers who are now
in homes, the survey reveals another explanation for how Canadians
are making decisions about home purchases. Seventy per cent
(versus 54 per cent last year) believe mortgage rates will
be higher next year. If mortgage rates are to rise, more than
half (56 per cent) of mortgage holders aren't overly concerned
because they have fixed rate mortgages, while 27 per cent
say they will probably make changes such as locking into a
fixed rate mortgage or splitting between fixed and variable.
"Considering the flurry of activity we've seen over
the last few years, it's likely that those who made their
purchases prefer to stay put and perhaps lock in their mortgages
while interest rates remain affordable," added Ms. Adams.
"The overwhelming preference among those who are planning
to buy is to move up to a larger home, indicating the majority
may be thinking and planning for the longer term."
The RBC survey also notes the following about Canada's potential
homebuyers:
Regional Differences
The only part of the country most likely to see increased
home buying activity is Atlantic Canada where those "very
likely to purchase" increased to 14 per cent from eight
per cent. Focusing on very likely to buy intentions, Alberta
holds steady from last year at 18 per cent. But the numbers
have decreased in other regions with British Columbia going
from 16 per cent to 11 per cent; Saskatchewan and Manitoba
going from 12 per cent to 10 per cent; Ontario from 14 per
cent to 10 per cent; and Quebec moving to seven per cent from
11 per cent last year.
Owners versus Renters
Further proof that those who bought during the recent flurry
of activity are more likely to settle in for a while is that
twice as many renters than owners (15 per cent versus eight
per cent) are very likely to purchase a home within the next
two years. Last year, 20 per cent of renters versus 10 per
cent of owners were very likely to purchase a home.
Housing Type Preferences
Detached homes were the choice of 71 per cent of Canadian
homebuyers. This was followed by condominium/loft at 12 per
cent; townhouses at eight per cent; and semi-detached homes
at four per cent. Atlantic Canadians are the most likely to
prefer detached homes (90 per cent) while Albertans are the
most likely to prefer condos (19 per cent). Those age 35-44
are the most likely of any age group to buy detached homes
while Canadians over age 55 are among the most likely to be
looking at condominiums (19 per cent).
Popularity of trading up
For homeowners who are planning to purchase a home in the
next two years, trading up is still the most popular reason
for a pending move. In fact, there was an increase in the
number of people who prefer a bigger home (51 per cent versus
46 per cent in 2005) and a decrease in the number of people
thinking of a same size (28 per cent versus 32 per cent) or
smaller home (20 per cent versus 22 per cent). Potential buyers
age 25 to 34 are the most likely to buy a bigger home (75
per cent) while those over age 55 were the most likely to
downsize (56 per cent).
New Homes versus Resale
For those buying, resale purchase intentions jumped to 74
per cent, an 11 per cent increase over last year. The youngest
homebuyers, age 18 to 24, are the most likely to prefer new
homes (30 per cent) while those age 25-34 are the most likely
to purchase resale property (76 per cent).
The housing industry is a key economic indicator and consumer
confidence barometer for the Canadian economy. The total value
of home construction, purchases, and renovations is forecasted
to be approximately $500 billion for 2006.
RBC is the largest residential mortgage lender in Canada
with more than
$91 billion in loans outstanding in 2005 and over 15 per cent
of the Canadian mortgage market. As the country's number one
source of financial advice on home ownership, consumer surveys
are one way in which RBC provides insight to Canadians about
the marketplace in which they live.
These are some of the findings of an RBC Financial Group
poll conducted by Ipsos-Reid between January 18 and 24, 2006.
The online survey is based on a randomly selected representative
sample of 2,001 adult Canadians. With a representative sample
of this size, the results are considered accurate to within
± 2.2 percentage points, 19 times out of 20, of what
they would have been had the entire adult Canadian population
been polled. The margin of error will be larger within regions
and for other sub-groupings of the survey population. These
data were statistically weighted to ensure the sample's regional
and age/sex composition reflects that of the actual Canadian
population according to the 2001 Census data.
| |
Nat |
BC |
AB |
SK/MB |
ON |
QC |
AT |
| Own A Home |
66%
|
65%
|
71%
|
74%
|
67%
|
62%
|
65%
|
| Percentage of Homeowners Who Have a Mortgage |
60%
|
59%
|
58%
|
65%
|
61%
|
61%
|
57%
|
| Owners and Renters Very Likely to
Purchase a Home in the Next Two Years |
10%
|
11%
|
18%
|
10%
|
10%
|
7%
|
14%
|
| Believe Mortgage Rates Will Be Higher in One Year's
Time |
70%
|
72%
|
72%
|
65%
|
69%
|
67%
|
75%
|
| Current Homeowners with Fixed Rate Mortgages |
56%
|
52%
|
50%
|
54%
|
61%
|
50%
|
59%
|
| Mortgage Holders Likely to Make Changes if Interest
Rates Rise in the Next Year |
27%
|
27%
|
28%
|
32%
|
24%
|
35%
|
25%
|
| Homebuyers Planning to Purchase a Detached Home |
71%
|
65%
|
66%
|
67%
|
71%
|
73%
|
90%
|
| Plan to Buy a Bigger Home |
51%
|
46%
|
53%
|
51%
|
52%
|
50%
|
58%
|
| Plan to Buy Resale Home |
74%
|
79%
|
76%
|
69%
|
73%
|
72%
|
73%
|
| Plan to Buy a New Home |
26%
|
21%
|
24%
|
31%
|
27%
|
28%
|
27%
|
About RBC Financial Group
Royal Bank of Canada (TSX, NYSE: RY) uses the initials RBC
as a prefix for its businesses and operating subsidiaries,
which operate under the master brand name of RBC Financial
Group. Royal Bank of Canada is Canada's largest financial
institution as measured by market capitalization and assets,
and is one of North America's leading diversified financial
services companies. It provides personal and commercial banking,
wealth management services, insurance, corporate and investment
banking, and transaction processing services on a global basis.
The company employs approximately 70,000 full and part-time
employees who serve more than 14 million personal, business
and public sector clients through offices in North America
and some 30 countries around the world. For more information,
please visit www.rbc.com.
- 30 -
Media contacts:
Judi Levita, RBC Financial Group, (416) 974-8810
John Wright, Ipsos-Reid, (416) 324-2900
For full tabular results, please see the Ipsos-Reid website
at www.ipsos.ca.
|
