Investors concerned housing bubble might burst, leaving them with bad investment
TORONTO – As housing prices continue to climb, an increasing number of Canadians don't think now is a good time to invest in their homes, according to a semi-annual survey of investors' view on a range of asset classes. The Manulife Investor Sentiment Index, now in its sixteenth year, revealed that "investing in your own home as an asset class" dropped four points in the last six months and has consistently fallen since May 2014, down 9 points in total. Investing in your own home encompasses the purchase of a home, paying off a mortgage and investing in renovations.
While 80 per cent said owning a home was their primary goal, only 25 per cent of respondents who currently rent said they plan to buy a home in the next 12 months.
“Canadians say that owning a house is a top priority for them, yet they’re not willing to invest in housing right now,” said Kevin Headland, Senior Investment Strategist, Manulife Investments. “Perhaps investors are feeling the timing for this investment isn’t right. Many real estate markets are red-hot right now, which makes it difficult for Canadians to purchase a home, even if it is a priority for them. There are concerns that this housing bubble might just burst, leaving them with a bad investment.”
Canadians divided on whether it is a good time to buy a house
Nearly a quarter (23 per cent) of Canadians felt it was not a good time to buy a home. Those respondents felt it was not a good time as they felt housing isn’t affordable (72 per cent), the real estate market is volatile (32 per cent) and they weren’t confident in their personal (financial) situations in order to buy a home (20 per cent).
Over one-third (35 per cent) of Canadians believe it’s a good time to buy a house right now because mortgage rates are low (71 per cent), and they feel it is a secure investment (45 per cent).
The most optimistic investors are from Atlantic Canada, 45 per cent believing it’s a good time to buy a house. British Columbia was the least optimistic with only 23 per cent saying it is a good time to buy.
Owning vs. buying in retirement
Nearly three quarters (73 per cent) of those who are 65 years or older plan to rent rather than own their homes. Only 11 per cent of the same age group plan to buy a house in the next 12 months. Four in 10 (44 per cent) Canadians plan to stay in their own homes when they retire. Only six per cent thought they would sell their homes and rent when they retired.
The Manulife Investor Sentiment index is a semi-annual index that has been published since 2000. The index is based on investor views on a range of asset classes as well as their confidence in these areas.
For more information and historical data, click here.
About the Manulife Investor Sentiment Index
Now in its 16th year, the Manulife Investor Sentiment Index is a semi-annual measure of investors' views on a range of asset classes, and savings and investment vehicles, as well as their confidence in these areas. The general population data is representative of all Canadians and is based on an online survey of 1,500 respondents who were at least 25-years-old. Data from affluent respondents was compiled from an online survey of 1,251 respondents who were household financial decision-makers 25 years and older, with a household income of at least $75,000, and investable assets of at least $100,000. The survey was conducted in May 2016 by Environics Research.
About Manulife’s Surveys
As a leading international financial services company, Manulife surveys consumers around the world to better understand what is important to our customers. For the past 16 years, the Manulife Investor Sentiment Index has been conducted in Canada and across Asia, gathering views on a range of asset classes, savings and investments. The Manulife Bank Debt Survey is a semi-annual overview of debt and savings priorities of Canadian homeowners. The annual Manulife Small Business Research Report helps advisors meet customers’ needs by better understanding of the challenges facing entrepreneurs, professionals and small business owners. Manulife’s Financial Wellness Study established a benchmark in 2015 to measure the financial wellness, overall health, and productivity of employees of our Institutional customers.