Assistance by way of the Home Buyers’ Plan might prove less impactful than expected in some Canadian markets, if new data from real estate information portal Zoocasa is any indication.
In its recent analysis, Zoocasa pointed out that the maximum withdrawal of $35,000 from the Registered Retirement Savings Plan by eligible buyers represents just 3.5% of a home purchase in Vancouver, and 4.3% of the benchmark housing price in Toronto.
On the flip side, the positive effects of the HBP will be more apparent in the nation’s most affordable markets. For instance, eligible buyers in Regina are projected to be able to fund as much as 13.5% of their home purchases with the Plan’s RRSP.
As a whole, median-income Canadians will need between 4.3 to 6 years to save up an amount equivalent to the $35,000 from the HBP.
“It would take those looking to buy Ottawa real estate the least amount of time to save; due to the city’s strong public service and government sectors, median incomes are higher than in other major regions at $44,700, making it possible for savers to set aside a maximum of $8,046 annually,” Zoocasa noted.
“In contrast, it would take the longest in Toronto, where the median income is comparably lower at $32,600, allowing for a maximum RRSP contribution of $5,868.”
Shifting demographics will be the major factor in the Canadian housing sector this year, especially in the red-hot Greater Toronto Area.
An aging population will swing market conditions in favour of Canadian millennials, who are now expected to enter their “peak earning years.” This demographic “will drive the market in 2020, particularly single millennials and young couples,” a RE/MAX report noted late last year.
Sustained economic growth and declining unemployment rates will also feed into market dynamism.
“While Toronto is experiencing its ‘busiest’ construction season ever, housing supply still falls short of the demands of the city’s rapidly growing population,” the RE/MAX report added. “Thanks to the region’s resilient economy, staggering population growth and relentless development, the 2020 market looks very optimistic.”