Canadian Press Published Thursday, June 23, 2022, 5:35 AM EDT Last Updated on Thursday, June 23, 2022, 5:35 AM EDT
Nearly half of Canadians who hire say they will continue to do so indefinitely and are unsure when they will be able to enter the housing market, a new study says.
Tenants surveyed by insurance company Canada Life cited lack of money, fear and insecurity as reasons to stay away, with almost 73 percent saying it was a bad time to buy a house and 17 percent saying they would never buy one.
Ninety-one percent of surveyed tenants believe that buying a home is becoming more difficult every year, and 89 percent expect the next generation to have an even harder time entering the housing market.
While 79% of respondents believe that property is a good investment, 64% do not think they will be able to buy a house unless they have financial support from others as family members.
The study, conducted between May 5 and 11, also found that Canadians between the ages of 25 and 29 were twice as likely to continue hiring indefinitely as those between the ages of 30 and 49.
However, the housing market is showing signs of cooling, with home sales falling nearly 22 percent in May from a year earlier and nearly nine percent between April and May, according to the latest data from the Canadian Real Estate Association (CREA). The national average, off-season adjusted housing price was $ 711,000 in May, down nearly five percent from April.
But that doesn’t mean tenants feel more confident in their ability to buy a home, as uncontrolled inflation and rising interest rates affect the availability of funds, said Paul Orlander, executive vice president of the individual client at Canada Life.
“These factors are likely to lead Canadians to continue to see home ownership as increasingly challenging,” he said in an interview.
The current owners are also under pressure, with 24% of respondents saying they feel poor.
As the Bank of Canada continues to raise interest rates, homeowners may face even more pain as mortgage payments rise.
The central bank, which is due to make its next decision on interest rates on July 13, is signaling that it is open to larger increases if necessary. Meanwhile, inflation in Canada rose to 7.7% in May, according to Canadian statistics.
Regardless of the decision Canadians make on home ownership, wealth and retirement plans will be affected.
While buying builds capital that can be valuable in the long run, home ownership and housekeeping costs can actually displace Canadians’ ability to save for retirement, Orlander said.
On the other hand, hiring can offer more flexibility and can keep the free cash flow for savings and investments every month that could go to retirement, he added.
This report by The Canadian Press was first published on June 23, 2022.
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