Regarding the 18-34 age group:
- 46% intend to buy a property within the next five years
- 69% want to buy a single-family home
- 81% obtained a mortgage the first time they applied
- 76% have a down payment less than 20% of the purchase value of the property
- 59% opt for a five-year mortgage term and 75% for a fixed interest rate
Montréal, February 8, 2019 - The Association des professionnels de la construction et de l’habitation du Québec (APCHQ), the Québec Federation of Real Estate Boards (QFREB) and the Fonds immobilier de solidarité FTQ released the results of a survey conducted by the firm Léger. Last fall’s survey focused on buying and selling intentions in Québec’s real estate sector. The results indicate that despite tighter mortgage rules, rising interest rates and increasing property prices, 23% of Québec households intend to buy a residential property within the next five years.
The 18-34 age group want to become homeowners
In Québec, 46% of households aged 18 to 34 intend to buy within the next five years. Many “millennials” continue to believe in the importance of home ownership in providing a better quality of life as well as a long-term investment.
Single-family homes are still the choice of preference by 65% of households that intend to buy within the next five years, a rate that reaches 69% for the 18-34 age group. Both young and older adults prefer to buy existing homes as they are perceived as more affordable than newly built properties. Of those who want to buy an existing home, 65% plan to invest an average of $14,500 in renovations. Households choosing a newly built home (20%) do so because they are delivered turnkey and better meet their search criteria. The four main considerations when buying a property are: price, proximity to services (restaurants, grocery stores, shops, hospitals, etc.), choosing a safe neighbourhood and distance to the workplace.
The suburbs are attractive to young adults. Across Québec, 53% of the 18-34 age group prefer the suburbs, especially for reasons of price. Of those who bought a property between 2013 and 2018, 74% opted for the suburbs. Moreover, 30% of 18-34 year olds would choose to live in a city centre if prices were more affordable.
2% increase in intent to buy a rental property
The survey shows that 9% of respondents have the intention of buying a property for the purpose of renting it out, an increase of 2% compared to the 2016 survey. Even though the 35-54 age group has the greatest interest in investing in a rental property, 9% of the 18-34 age group are also interested in reaping the rewards of this type of property. However, most households (85%) intend to buy a principal residence.
“The job market is excellent, so despite the tighter mortgage rules by the federal government and rising interest rates, the purchase of a property remains a realistic goal for young people, which the record activity of real estate brokers confirms,” stated Yanick Desnoyers, Manager of the QFREB's Market Analysis Department.
Prudent mortgage management
The study indicates that the majority of buyers prudently manage their loan. The survey finds that 84% of first-time homebuyers obtained a mortgage on their initial application. As for “millennials”, 81% qualified on their first request and only 3% said they had to choose a cheaper property because they did not qualify the first time they applied for a mortgage.
Another finding, a large percentage (43%) of those who bought a property in the last five years managed to pay more than the required 20% down payment, which saved them from having to take out mortgage insurance. The down payment remains difficult for the 18-34 age group as 76% of them cannot put together the 20% necessary for the purchase of a property. Personal savings are the primary source of a down payment for 45% of households, followed by the Home Buyers’ Plan (HBP) at 30%. Gifts (9%) and loans (4%) from relatives and friends are also one of the main sources of the down payment.
“Even though buying intentions are strong, it is a fact that among 18 to 34 year olds, only one-in-four buyers manage to raise a down payment of 20% or more, and if they do, it is often thanks to help from family. The down payment is still one of the main obstacles to home ownership. APCHQ believes that measures can be taken to help young families realize their dream of buying their first home,” stated Paul Cardinal, Manager of the APCHQ Economic Department.
The majority of households (63%) make use of a mortgage term of five years or more, and 72% of households opt for a fixed rate mortgage. In the 18-34 age group, 59% choose a five-year term and 75% have a fixed rate.
Most households (80%) who have bought a property in the last five years are comfortable with their level of debt. However, rising interest rates are a source of concern as 32% of past buyers state that they could not cope with a 2% hike in the mortgage rate. This unease is increasing among 18-34 year olds, 37% of whom say they could not handle a sharp rise in interest rates.
The 55 and over age group are renting
When asked about their choice of home, 42% of those 55 years of age and over who intend to sell their principal residence over the next five years indicate that they are looking to rent. “This trend has been evident over the past few years, as many retirees are looking for a housing formula with fewer responsibilities and more services, as well as all-inclusive billing,” pointed out Normand Bélanger, President and CEO of Fonds immobilier de solidarité FTQ.
Other findings
- Three-quarters of households who purchased in the last five years have monthly mortgage payments of less than $1,000.
- Condominiums are of interest primarily to future buyers in the Montréal CMA (22%) and those aged 55 and over (31%).
- 63% of respondents report living less than 30 minutes from their place of work (53% in the Montréal CMA).
- Of the new homeowners who recently completed renovations, nearly one third did so to improve the energy efficiency of the property.
- Among those who intend to buy a property within the next five years, the proximity of schools ranks 9th among the 11 buying criteria:
- Price - 62%,
- Proximity to services (restaurants, grocery stores, stores, etc.) - 36%,
- Neighbourhood safety - 33%,
- Proximity to workplace - 33%,
- Access to parks and green spaces - 23%,
- Proximity of relatives or friends - 20%,
- Proximity of public transport - 18%,
- Proximity of major highways - 15%,
- Proximity of schools - 12%,
- Proximity of daycares - 4%,
- Proximity of CEGEPs or universities - 3%.
About the APCHQ
Founded in 1961, APCHQ is a private, non-profit organization that seeks to develop and enhance the professionalism of its 18,000 corporate members, which belong to 14 regional associations. Through technical, legal, administrative and training services as well as government and public interventions, APCHQ helps its members improve their skills and succeed in a highly competitive environment. Furthermore, ACPHQ is mandated to negotiate the renewal of collective agreements on behalf of 14,500 employers in the residential construction sector.
About the QFREB
The Québec Federation of Real Estate Boards (QFREB) is a non-profit organization representing the province’s 8 real estate boards and their nearly 13 000-member real estate brokers. Its mission is to support Québec’s real estate boards in order to defend, protect and promote the interests of real estate brokers through the provision of services in the areas of professional practices, public affairs and market analysis. The QFREB is guided by an approach centred on collaboration and resource sharing.
About the Fonds immobilier de solidarité FTQ
Created in 1991, the Fonds immobilier de solidarité FTQ promotes economic growth and employment in Québec by strategically investing in profitable and socially responsible real estate projects in partnership with other industry leaders. The Fonds immobilier backs residential, office, commercial, institutional and industrial projects of all sizes across Québec. As of May 31, 2018, it had 46 projects worth $2.9 billion in progress, 50 properties under management, 2 million square feet of land for development and $76.3 million allocated to affordable, social and community housing. The Fonds immobilier is a member of the Canada Green Building Council.
fondsimmobilierftq.com
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