Two out of three first-time buyers considering a home purchase are confident in future housing values but are thinking about monthly payments, the potential for rising property taxes and interest rates, according to a new report released today by Genworth Financial Canada.
Genworth’s winter First-Time Home buyer's Monitor provides a snapshot of the preferences and expectations of first-time buyers across Canada. Property taxes, interest rates and high monthly payments were the highest ranked among a list of seven issues first-time buyers were asked about, while concerns that housing values might decline in the future ranked lowest.
“Overall, this report illustrates that Canadians continue to have confidence in the strength of the housing market,” said Peter Vukanovich, president of Genworth Financial Canada. “They take cyclical market fluctuations in stride and are focused on the long term benefits of building equity sooner.”
Only 33 per cent of first-time buyers surveyed for the report said “a drop in house values in the future” was of concern to them, making it the lowest-rated of seven possible factors. The top consideration, at 63 per cent, of first-time buyers nationally was “high monthly payments,” which was highest-ranked in the most expensive housing markets, including Alberta (74 per cent), the Greater Toronto Area (73 per cent), Ontario (71 per cent) and B.C. (65 per cent).
On the other hand, Manitoba remains one of the more affordable provinces for home buyers.
Rising property taxes were cited by almost 60 per cent of first-time buyers across the country. Almost 60 per cent nationally were also apprehensive about rising interest rates.
“Canadians are savvy shoppers and they’re looking at the bigger financial picture,” said Vukanovich. “Economic factors like monthly payments, rising interest rates and property tax increases are playing a much greater role in homeownership decisions — particularly among the first-time home buyer segment.
“Nationally, more than two-thirds (68 per cent) of respondents said that a home is the single most important investment they’ll ever make. This shows that Canadian first-time homebuyers continue to believe that buying a home remains one of the most solid personal investments they will make in their lifetimes, and they understand the importance of achieving the goal of homeownership.”
Following extraordinary housing price spikes in Alberta’s red-hot economy, which have begun to moderate, 54 per cent of buyers surveyed were worried about declining values. In Toronto, where home and condo values also have climbed rapidly, 50 per cent of first-time buyers expressed the same sentiment.
Nationally, most first-time buyers planned to spend between $100,000 to $199,000 — the most active price range in Winnipeg — except in Alberta and the Greater Toronto Area, where respondents cited $200,000 to $299,000, and British Columbia where first-time buyers expected to pay from $300,000 to $399,000.