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Mortgage rates stable, house prices may rise

Canadians don't expect mortgage rates to rise, but do expect housing prices to go up, says RBC survey. Canadians voicing "buy now rather than later" preference

The possibility of mortgage rates rising in 2007 seems to be of much less concern across Canada, according to RBC's 14th Annual Homeownership Survey. In fact, over half (57 per cent) of Canadians believe mortgage rates will drop or stay the same, compared to 31 per cent last year. The RBC poll also reveals that 49 per cent of Canadians are less apprehensive about interest rate increases, compared to 44 per cent in 2006.

"When we assess the consumer sentiment being expressed in this year's study, a picture emerges of confident Canadians weighing their homebuying options in a very positive light," explained Catherine Adams, RBC's vice-president of Home Equity Financing.

At the same time, while over half of Canadians (59 per cent) believe housing prices will rise in 2007, homebuying intentions are holding steady, with three in ten Canadians (28 per cent) planning to buy a house over the next two years.

As for the value Canadians place on homeownership, the vast majority (90 per cent) think purchasing a home is a good investment, according to RBC's poll. As well, the percentage of Canadians who estimate that the market value of their homes has increased by 50 per cent or more over the past two years, has doubled since last year's survey (11 per cent compared to 6 per cent.)

"It's clear an overwhelming majority of Canadians believe purchasing a home is a good investment. In fact, the average Canadian estimates their home has increased by 22 per cent in the last 2 years," Adams added. "And the 'buy now' message is coming through loud and clear across all age groups - from 25 through to 55 plus."

Of those Canadians planning to buy a house within two years, an increasing number are looking at a shorter purchasing window. Over half (58 per cent) of all Canadians are saying buy now, don't wait for next year.

Forty-four per cent (up from 37 per cent in 2006) are looking at buying within the next 12 to 18 months.

RBC Homeownership Survey 2007 Details

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Regional differences

Focusing on very likely to buy intentions, BC, Ontario, and the Prairies are holding steady from last year, but the numbers have softened in other regions with Alberta going from 18 per cent to 12 per cent; Atlantic going from 14 per cent to 10 per cent.

Renters and owners

Of Canadians who plan to buy a home within the next 18 to 24 months, 62 per cent are renters and 48 per cent are owners. Within the shorter timeframe of the next 12 months, owners outnumber renters, 27 per cent to 18 per cent.

Housing type preferences

Detached homes continue to be the housing type of choice for most Canadians who are likely to buy a home in the next two years - 72 per cent voiced this preference. Condominiums were preferred by 10 per cent, down from 12 per cent last year. Semidetached homes were cited by 7 per cent, up from 4 per cent in 2006. Townhouses fell to last choice, named by 6 per cent of Canadians planning to buy in the next two years, down from 8 per cent last year.

More Canadians thinking "small" for next home purchase

Desiring a bigger house continues to be the most popular reason for an upcoming move, cited by 48 per cent of Canadian homeowners who are planning to purchase a home in the next two years. However, an increasing number are now saying they'll be looking for a smaller home - 33 per cent compared to 20 per cent in 2006. Eighteen per cent responded that they'll be considering a home about the same size as their present one.

Gently used tops newly built

Of Canadians planning to buy a home in the next two years, more are likely to buy a resale home (77 per cent) than a newly-built home (23 per cent). This compares to 74 per cent who favoured resale in 2006, and 26 per cent who preferred a newly-built home.

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