Millennials are buying homes but many have parental help, survey finds
Feb. 28, 2017
While slightly more than a third of Canadian millennials now own a home, nearly two-fifths of them had help from parents to get into the housing market, says a new global study from HSBC.
Surveying home-buying attitudes and behaviour among 1,000 Canadians and 9,000 people total globally, HSBC found that 82 per cent of non-homeowner Canadian millennials intend to buy in the next five years, in line with the global average. But, like their counterparts worldwide, only half of them have set an approximate budget.
As housing markets continue to froth, particularly in the Greater Toronto Area, the survey offers a reminder to young house hunters to get their finances in order and align ownership dreams with market realities.
HSBC’s study, Beyond the bricks: The meaning of home, reinforces findings from previous research, including one last year from the Bank of Montreal. It found that 44 per cent of millennials expected help from parents when buying their first home, either in the form of a loan or gift.
Even as HSBC’s survey demonstrates young people are getting into the market, parental prop-ups are becoming a key tool to make it happen. Seven in 10 Canadian millennials told HSBC they had neither saved enough for a home down payment nor set a firm budget. Of those who had bought a home, 42 per cent said they spent beyond their budget.
“I can’t stress enough the importance of having a good plan that includes getting the right financial services advice and support before and after you buy,” said Larry Tomei, HSBC Bank Canada’s executive vice-president and head of retail banking and wealth management.
Home prices, especially in Toronto, continue to have many financial leaders and industry observers on alert. Last fall, Canada Mortgage and Housing Corp. issued a “red” alert for the country’s real-estate sector, suggesting home buyers put more equity into down payments for safety. And last week, Royal Bank of Canada chief executive Dave McKay added his voice to a growing number of suggesting that the Toronto market, like Vancouver, could benefit from cooling.