High Home Prices a Growing Obstacle for First-Time Buyers

The ongoing surge in home prices across the country is discouraging many young non-homeowners, many of whom are giving up on the dream of homeownership. Despite best efforts to save for a down payment, hopeful buyers simply can't keep pace with today's price gains. A majority of first-time buyers are relying on personal savings, withdrawals from RRSPs, and gifts from parents or other family members for their down payment. The 2015 Department of Finance rule change requires borrowers to put 10% down for the portion of the purchase price above the half-million-dollar mark, resulting in a minimum of $46,682, or 6.5% of the purchase price. Nearly half of current non-homeowners (48%) say their budget is less than $500,000, well short of the national home price of $716,828, even when the high-priced markets of Toronto and Vancouver are taken out of the equation.

86% of RBC’s survey respondents have money saved up, but 40% have less than $25,000 set aside for their purchase. Despite the hurdles, more than a quarter of non-owners (27%) still plan to buy a home in the coming year.