Homeowners in the Greater Toronto Area, Calgary and Vancouver are outpacing the national average when it comes to their intentions of buying a property within five years, according to the first BMO Housing Confidence Report released Tuesday.

Intentions to buy in the Greater Toronto Area (57 per cent), Calgary (62 per cent) and Vancouver (53 per cent) were above the national average (46 per cent).

Also, homeowners in Canada expect prices to rise by 2.0 per cent over the next year while those in Calgary expect an increase of 2.4 per cent.

“The fact that 46 per cent of Canadian homeowners intend to buy a property in the next five years implies that Canadians are feeling confident in the current real estate market environment,” said Martin Nel, vice-president of lending and investments with BMO Bank of Montreal. “However, that certainty is tempered, given the adverse effect moderate increases in home prices and mortgage costs would have on the average homeowner.”

“Rising debt and elevated house prices have increased the vulnerability of a meaningful number of households, and their financial situation will worsen if interest rates increase even moderately,” added Sal Guatieri, senior economist with BMO Capital Markets. “With rates likely to remain low for some time, the recent tightening in mortgage rules will help to cool credit growth and the housing market.”

The BMO report also revealed: 18 per cent plan to downsize to a smaller home and the same percentage intends to up-size to a larger home; 10 per cent plan to sell their home and move in to a rental property, retirement community, or move in with family in the same time period; 21 per cent plan to purchase an additional property for income, investment, or recreation; 57 per cent are familiar with the new mortgage regulations introduced earlier in 2012; 22 per cent say they are less likely to buy a new home in the next five years because of the changes; and 29 per cent planning to buy in the next five years say that they are likely to spend less on a new home as a result of the new rules.

Nationally, intentions to buy drop significantly from 46 per cent to 36 per cent in the event of a five per cent increase in home prices. In Alberta, a five per cent increase would change intent to buy by only one per cent; however, a 10 per cent increase would lower intent by nine per cent, moving from 51 per cent to 42 per cent.

Source: Mario Toneguzzi, Calgary Herald

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