As real estate prices spiked to record highs over the past year, an overwhelming majority of Canadians now feel that low interest rates are harming the market rather than helping it.
At the onset of the pandemic, the Bank of Canada set its borrowing cost at a historic low of 0.25% in an attempt to help stimulate the economy. From April 2020 to March 2021, a buying frenzy ensued. Real estate sales shot up 235%, with the average Canadian home price rising a whopping 44%.
A new report from Zoocasa found that an overwhelming majority of Canadians — 80.5% — now feel that the low mortgage interest rates are driving up the prices of homes. The survey also found that more than three-quarters of Canadians believe that the COVID-19 pandemic caused real estate prices in suburban areas and smaller towns to rise at unstable rates, with 77.2% agreeing. When the same question was asked in February of this year, 25.4% fewer Canadians agreed.
When asked what the biggest areas of concern when purchasing a home are, the top two answers revolved around money. Just over 78% of respondents said they were concerned about affordability, and 70.3% reported concerns over biddings wars and the fact that it’s a seller’s market.
With affordability being a very real concern as the national average home price surpassed $600,000 this year, purchasing a home now requires a higher household income. Half of the prospective buyers surveyed had a household income of over $100,000, and 20% had an income above $160,000. According to the report, this trend was seen even in the most affordable market segments, with 49.14% of buyers looking to purchase a condo having an income over $100,000.
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For those who were able to purchase a home over the past year, the necessity of having to work remotely drove many buyers to want a larger space to comfortably set up a home office. Interestingly, the survey found that there’s now a decrease in the number of people planning to continue working from home following the end of COVID-19 lockdown measures. Just 29.7% said they would keep working from home, which marks a 7.1% drop from February.
Following that same trend, there was also a drop in the number of respondents who said that home office space is a more desirable characteristic, falling 15.9% from February. There was also a 10.5% drop in the number of respondents who said outdoor space is on their list of most desirable home characteristics.