Chart Courtesy of Finder.com Generation Rent Survey, June 2022
A recent national survey called Generation Rent reveals that about nine million Canadians want to rent forever or give up the idea of homeownership completely, with the highest percentage in British Columbia.
This comes shortly after RBC Economics released a report showing housing affordability in Canada is at its lowest in 31 years and just after multiple mortgage rate hikes.
The Bank of Canada has raised its key interest rate three times since March, with the biggest increase — a 75 basis point increase — widely expected on July 13.
Major banks have already raised rates on five-year mortgages — Canada’s most popular mortgage option — to 4.73 percent, from 2.87 percent at the start of this year.
A 75 basis point increase, combined with higher bond yields impacting long-term interest rates, could push five-year mortgage rates to 5 percent in weeks, analysts say.
In the new Generation Rent survey, 29 percent of Canadians have either given up on the dream of owning their own home or resigned themselves to being “forever renters.”
Shortly after the Bank of Canada’s most recent rate hike in June, financial research firm Finder asked more than 1,200 Canadians about their intentions to buy a home.
It turns out that one in ten Canadians is still optimistic about buying a home for the first time in five years, but nearly a third (29 percent) said “renting forever” was a much more realistic option.
Survey data shows that 16 percent of Canadians — representing more than 5 million adults — said they would no longer be interested in home ownership by 2022.
Another 13 percent (nearly 4 million) said they expect to rent for the rest of their lives.
In a similar 2019 Finder survey, 1 in 10 Canadians reported no interest in owning a home, so the number of Canadians joining the Generation Rent ranks rose 60 percent in just two years, noted Romana King, senior financial editor at fintech comparison platform Finder.com.
“Buying a home is an important decision that requires a great emotional and financial commitment,” King says. “For many, the erosion of housing affordability combined with rising mortgage costs means that the barriers to owning a home seem almost insurmountable — turning a generation of Canadians into perpetual renters.”
Residents of BC said they were most likely at 29 percent to rent a home rather than buy it.
Quebec residents were the second least interested in home ownership, with nearly a quarter (23 percent) stating they have no desire to own a home.
Alberta and Ontario residents also expressed their disinterest, with 17 percent saying they have no ownership interest and a plan to rent forever.
Home ownership in Canada is 68.5 percent, as of 2018, according to Statistics Canada.
While this is a relatively high percentage, Canada lags behind comparable countries, as measured by the Organization for Economic Co-operation and Development (OECD). Based on data from the OECD, home ownership rates in Canada are in the lower third compared to 38 other European, Eastern European and Scandinavian countries.