Millennials Could Drive the First-Time Home Buyer Market – If They Save
8th Mar 2017
According to a new consumer study, 8 of 10 millennials in Canada expect to buy their first home in the next five years. HSBC’s study Beyond the Bricks: the Meaning of Home was conducted in 9 countries including Canada, Australia, UK, the US and China.
Millennials could be the primary drivers of the first-time home buyer market.
While just over a third of millennials in Canada own their own home the study found 82% of millennials (Canadians born in the 80s and 90s) plan to buy a home in the next five years. However, the study reveals that 69 per cent of respondents say they are finding it hard to save a down payment while a third could not afford the type of home they wanted.
Millennials are going to have to save more money for a down payment to get into the first-time home buyer market.
New housing regulations implemented in the fall of 2016 creating tougher borrowing policies has already put pressure on Winnipeg home buyers. The government expanded stress tests making it harder for nearly 20% of new home buyers to qualify for mortgages. It’s estimated 20% of home buyers aren’t qualifying for less purchasing power as before the new regulations.
The HSBC study found that 21% of millennial home owners moved back in with their parents to save for a deposit. More than a third (37%) of millennial home owners used Mom and Dad as a source of funding.
The millennials are going to have some work to do if they are going to drive the first-time home buyer market.
The average price of a home in Winnipeg is $272,553. A 5% down payment would require $13,627 be saved. According to Statistics Canada, the median after-tax income for the average household in Manitoba is $61,800. The household saving rate in Canada is 5.8% a year. It would take the average person in Winnipeg approximately 4 years to save for a 5% deposit on a house.
Vertuity Mortgage’s First-Time Home Buyer Guide has a section dedicated to saving for a down payment. Click here to visit the guide: First-Time Home Buyer Guide
From the First-Time Home Buyer Guide here’s 7 steps for saving for your down payment.
- Have A Clear Goal
- Open A Dedicated Savings Account/TFSA
- Pay Off Any Other Debts
- Tighten Your Belt and Spend Less
- Plan and Budget
- Downgrade Your Current Vehicle
- Check and Negotiate Interest Rates