New gov­ern­ment incen­tives help but mar­ket fun­da­men­tals more impor­tant, Cana­di­ans say

Cana­di­ans who are con­sid­er­ing pur­chas­ing their first home are pri­mar­ily moti­vated by lower home prices and very low inter­est rates, but some require con­fi­dence in the econ­omy and their employ­ment prospects before they will enter the mar­ket, accord­ing to a report released by Royal LeP­age Real Estate Ser­vices.

Eighty-six per cent of poten­tial first-time buy­ers say low inter­est rates make them more likely to pur­chase a home; 81% cite lower hous­ing prices as a moti­vat­ing fac­tor; while 76% cite job secu­rity and 64% say a sta­ble econ­omy is an impor­tant fac­tor in their deci­sion to buy.

Poten­tial buy­ers were asked to rank their top incen­tives for pur­chas­ing a first prop­erty. While home prices and inter­est rates took the num­ber one and two rank­ings, respec­tively, the third most pop­u­lar incen­tive was the First-Time Home Buy­ers’ Tax Credit. The recently intro­duced Home Ren­o­va­tion Tax Credit for 2009 was cited by 42% of poten­tial first-time buy­ers as either ‘very likely’ or ‘some­what likely’ to impact their pur­chas­ing decision.

“When first-time buy­ers stepped out of the mar­ket in the fourth quar­ter of 2008, at the height of the global reces­sion, their absence was pro­foundly felt. With­out sig­nif­i­cant vol­umes of entry-level homes trad­ing hands, the entire mar­ket limped through the win­ter months. First-time buy­ers are back in force this spring, and with them the begin­nings of a mar­ket recovery.”

“While these con­sumers appre­ci­ate gov­ern­ment incen­tives such as tax cred­its, greater RSP deduc­tion lim­its and rebates on home ren­o­va­tions, it is markedly improved afford­abil­ity that is prov­ing to be the pow­er­ful draw­ing card,” said Mr. Soper. “Our sur­vey demon­strates how impor­tant afford­abil­ity fac­tors such as inter­est rates and house prices are in stim­u­lat­ing demand.”

Across the coun­try, poten­tial first-time home­buy­ers agreed that afford­abil­ity was their top con­sid­er­a­tion, how­ever the sur­vey also revealed dif­fer­ences amongst buy­ers in var­i­ous regions of Canada. Mr. Soper con­tin­ued, “The sig­nif­i­cant response dif­fer­ences from region to region show how closely the res­i­den­tial real estate mar­ket is tied to broader eco­nomic trends and con­sumer con­fi­dence. Buy­ing your first home is a major life deci­sion, and peo­ple are more likely to pur­chase a home if they feel com­fort­able about the state of the econ­omy and con­fi­dent that they will have a job to sup­port their new mort­gage obligation.”

Encour­aged by recent gov­ern­ment ini­tia­tives, home own­er­ship in Ontario is becom­ing a real­ity for an increas­ing num­ber of younger pur­chasers. Across Ontario, 36% of poten­tial first-time buy­ers are most likely to pur­chase prop­erty in an urban set­ting. Con­do­mini­ums con­tinue to attract first-time buy­ers in the Greater Toronto Area with urban com­mu­ni­ties at acces­si­ble price points appeal­ing most to mar­ket new­com­ers. In addi­tion to afford­abil­ity, loca­tion is a lead­ing fac­tor dic­tat­ing con­do­minium appeal. Neigh­bour­hoods in Toronto’s east and west down­town core are pop­u­lar with first-time buyers.

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