TORONTO – The number of Canadians expecting to buy a home within two years has dropped dramatically even though overall confidence in real estate remains strong, according to an annual survey published Tuesday by Royal Bank of Canada.
The poll found 15 per cent of those surveyed said they were likely to buy in the next two years, a drop from 27 per cent of respondents in last year’s survey.
The 12 percentage point drop is the biggest recorded by the poll, now in its 20th year.
Still, an overwhelming majority of those polled (84 per cent) felt real estate remained as a sound investment, while 52 per cent said now is a good time to get into the market.
“The more cautious mood this year is not surprising and is consistent with broader economic and industry forecasts,” said Sean Amato-Gauci, RBC senior vice-president of Home Equity Financing with RBC.
“An unseasonably warm spring, low rates and anticipation of mortgage rule changes may have led many Canadians to move forward their home purchases in the first half of 2012,” he added.
Nearly half of those surveyed (49 per cent) said they expected mortgage rates to be same this time next year, while 43 per cent said they believe home prices will continue to climb.
Among those who said they intended to buy, 40 per cent said they would be signing a mortgage for the first time.
“Our findings suggest confidence in the housing market is still high and young Canadians are the bright spot as they look to buy their first home and seek the advice to do it right,” said Amato-Gauci in a release.
RBC (TSX:RY) says that three-quarters of respondents said changes in government mortgage rules will impact or delay prospective home buyers but other survey findings suggest this may be more of a perception than reality.
Of the respondents who said they were prospective buyers, 59 per cent said a required downpayment of at least five per cent would have little or no impact and 56 per cent said there was a minimal impact from a shortened maximum amortization period (reduced to 25 years last year, down from 30 years).
The survey, was conducted online for RBC by Ipsos Reid from Jan. 31 to Feb. 8, is based on a randomly selected sample of 3,005 Canadian adults. It’s considered accurate within three percentage points, 19 times out of 20, although regional breakdowns are less reliable because of smaller sample sizes.