RBC Survey Indicates Potential Slowdown in Homebuying



    More Homeowners Likely to Sit Tight

    TORONTO, March 4 /CNW/ - With buying intentions at their lowest level in
several years, a new RBC study indicates a potential shift in the Canadian
home buying landscape. According to RBC Royal Bank's 15th Annual Homeownership
Survey, significantly fewer Canadians intend to buy a home within the next two
years.
    Overall intentions to purchase a home have dropped by five percentage
points to 23 per cent. The intensity to buy has also decreased with those very
likely to buy slipping from nine per cent in 2007 to seven per cent in 2008,
the lowest level since the survey was started fifteen years ago.
    While the number of Canadians who would "buy now", rather than wait until
next year is still strong at 52 per cent, it has dipped from 58 per cent in
2007, suggesting a potential slowdown in the housing market. Similarly,
although the majority of Canadians (85 per cent) continue to believe
purchasing a home is a good investment, the proportion is down from 90 per
cent in 2007, but still much stronger than it was 10 years ago (76 per cent).
    "Considering the flurry of activity we've seen over the last few years,
this year's results definitely signal a change," said Catherine Adams, RBC
Royal Bank's vice-president, Home Equity Financing. "While those very likely
to buy a home might be at its lowest level in over a decade, we need to keep
in mind that the overwhelming majority of Canadians still believe purchasing a
home is a good investment. Canadians continue to be generally very optimistic
about our housing market and it's merely the degree of optimism which is down
from last year."
    The weaker outlook is also evident in the number of Canadians who expect
housing prices to rise (56 per cent), which is down three percentage points
from last year (59 per cent). While Canadian homeowners estimate the value of
their homes to be on average five per cent higher than they did last year,
this increase is smaller than in the previous year. Fewer Canadians also
believe mortgage rates will stay the same in 2008. While the majority of
respondents (46 per cent) believe mortgage rates will be higher (versus 43 per
cent last year), some are a little more optimistic as 23 per cent feel rates
will be lower -- an increase of seven percentage points from 2007. Of the
23 per cent who plan to buy in the next two years, 15 per cent say they will
choose a variable rate mortgage, compared with 13 per cent in 2007. However,
overall fixed rate mortgages are still the preferred choice for potential
buyers and current homeowners with (49 per cent), planning to lock in for five
or more years. Four in ten (37 per cent) say they will choose a combination of
both.
    "Despite all the concerns we've heard about the US housing market,
Canadians do not appear to be heading towards a housing crunch. The proportion
of Canadians who say they have a mortgage has levelled off from 2007, with the
average mortgage amount left to pay unchanged from last year. The intended
down payment amount for those planning buy has also risen this year, which
further suggests we continue to have a healthy housing market," added Ms.
Adams.

    2008 Ownership Survey Details

    Regional Differences

    Purchase intentions are down across the country, except in Quebec, where
those likely to buy a home within the next two years increased to 21 per cent
from 19 per cent. Looking at those respondents who are very likely to buy
home, Saskatchewan and Manitoba lead at nine per cent, Alberta at eight per
cent with BC, Ontario, and Quebec at seven per cent and Atlantic Canada at
five per cent.

    Owners versus Renters

    Renters still appear to be eager to enter the market; while not to the
same degree as last year. Thirteen per cent of renters last year were very
likely to purchase a home, while this year that number has dropped to 10 per
cent.

    Housing Type Preferences

    Detached homes were the preferred choice of Canadian homebuyers at 70 per
cent. This was followed by condominium/loft at 12 per cent; townhouses at
seven per cent; and semi-detached homes at six per cent. By contrast, in 2004
ten per cent preferred a townhouse and nine per cent a condo indicating the
rising popularity of condo units. Those over 55 were most likely to be looking
at condominiums (15 per cent).

    Popularity of trading up

    Despite the fact that fewer Canadians are intending to buy a home in the
next two years, for those who are buying, there is an increase in the number
of people who prefer a larger home (52 per cent versus 48 per cent in 2007).
    Potential buyers age 25 to 34 are the most likely to trade up and buy a
bigger home (69 per cent), while as expected, those over age 55 are most
likely to prefer a home the same size (36 per cent) or to downsize (35 per
cent).

    New Homes versus Resale

    Across all ages, resale homes continue to be the preferred choice of
76 per cent of those intending to buy a home in the next two years, a jump
from 60 per cent who preferred resale homes five years ago.

    
    -------------------------------------------------------------------------
    Regional Differences             Nat    BC    AB SK/MB    ON    QC    AT
    -------------------------------------------------------------------------
    Own A Home                       64%   64%   65%   73%   67%   51%   74%
    -------------------------------------------------------------------------
    Percentage of Homeowners Who
     Have a Mortgage                 62%   62%   62%   47%   63%   66%   57%
    -------------------------------------------------------------------------
    Owners and Renters Very Likely
     to Purchase a Home in the Next
     Two Years                        7%    7%    8%    9%    7%    7%    5%
    -------------------------------------------------------------------------
    Believe Mortgage Rates Will Be
     Higher in One Year's Time       46%   49%   38%   48%   49%   41%   48%
    -------------------------------------------------------------------------
    Believe Housing Prices Will Be
     Higher in One Year's Time       56%   58%   39%   65%   61%   50%   64%
    -------------------------------------------------------------------------
    Homebuyers Likely to choose a
     Fixed Rate Mortgage on their
     new home                        49%   44%   49%   42%   51%   51%   42%
    -------------------------------------------------------------------------
    Homebuyers Planning to Purchase
     a Detached Home                 70%   62%   68%   71%   70%   74%   75%
    -------------------------------------------------------------------------
    Homebuyers Planning to Buy a
     Bigger Home                     52%   41%   57%   57%   46%   63%   50%
    -------------------------------------------------------------------------
    Homebuyers Planning to Buy
     Resale Home                     76%   85%   75%   79%   77%   65%   83%
    -------------------------------------------------------------------------
    Homebuyers Planning to Buy a
     New Home                        24%   15%   25%   21%   23%   35%   17%
    -------------------------------------------------------------------------
    

    RBC is the largest residential mortgage lender in Canada with more than
$127 billion in loans outstanding at the end of 2007 - and over 15 per cent of
the Canadian mortgage market. As the country's number one source of financial
advice on homeownership, RBC conducts consumer surveys as one way to provide
insight to Canadians about the marketplace in which they live.

    These are some of the findings of an RBC poll conducted by Ipsos Reid
between January 17 and 21, 2008. The online survey is based on a randomly
selected representative sample of 3,023 adult Canadians. With a representative
sample of this size, the results are considered accurate to within +/-1.8
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 2006 Census data.

    For full tabular results, please see the Ipsos Reid website at
www.ipsos.ca.




For further information:

For further information: Media contacts: Jackie Braden, RBC, (416)
974-2124; John Wright, Ipsos Reid, (416) 324-2900


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890