ZOLO Ottawa Real Estate

Rising interest rates and an uncertain economic outlook are causing many would-be homebuyers to postpone their plans to purchase a house.

Nearly half (43%) of those polled in a recent Scotiabank survey said they are putting their home purchase plans on hold, an increase from 22% in 2021 and 20% in 2020.

Half of those aged 18 to 34 said rising interest rates are causing them to reevaluate their purchase plans.

“It’s no surprise that a perfect storm made up of the rising cost of living, housing supply shortages, and increased demand has caused Canadians to feel like homeownership is out of reach,” John Webster, Head of Real Estate and Secured Lending at Scotiabank, said in a release. “It’s important that Canadians know that they’re not alone. Many others are going through the same thing, and it’s why more people are looking for sound advice from a trusted source.”

When it comes to general economic concerns, over 80% of Canadians say the rising cost of goods and services—AKA inflation—is more of a concern than rising interest rates. In February, headline inflation came in at a 30-year high of 5.7%

For many, homeownership feels increasingly out of reach

With the average home price in Canada reaching $816,720 as of February—a 50% increase since 2020—an overwhelming 96% of Canadians believe housing accessibility is a problem.

Another 9 in 10 aspiring homeowners said they feel locked out of ever owning a home, according to data from the Home Ownership in Canada Study, commissioned by real estate technology company, Key.

“Rising home prices have outpaced wages, making it impossible for Canadians to get ahead,” said Key co-founder and CEO Rob Richards. “And with rising interest rates and inflation, the affordability gap is tougher than ever to close.”

Despite the affordability hurdle preventing many hopeful buyers from entering the housing market, the desire for homeownership remains strong.

Nearly a third of non-owners still expect to purchase a primary residence within the next two years, according to data released recently by Mortgage Professionals Canada. That percentage rises to 36% for those aged 25 to 34.

Additional homebuyer insight

Other findings from the Scotiabank survey include:

  • Over a third of Canadians (35%) are looking to move out of their city in order to get more value out of their money (up from 29% last year)
    • The percentage of those looking to move out of the city is higher in Ontario at 39%
  • 59% of homeowners are planning upgrades or renovations to their home within the next two years
  • 15% are planning to buy a new home or sell their current home
  • 10% are planning to buy a leisure/investment property

These results are based on a survey of 2,038 homeowners and 914 renters from across the country conducted between Feb. 15 and 17, 2022.


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