Here’s how sidelined homebuyers are preparing for possible rate cuts
Global News
More than half of would-be homebuyers indicated they’ve had to postpone their property search amid the central bank’s rapid tightening cycle.
Many Canadians who’ve been boxed out of the housing market since the Bank of Canada started hiking interest rates almost two years ago are waiting for the policy rate to drop before jumping back into the fray.
A Royal LePage report based on Leger polling released Tuesday shows that more than a quarter of Canadians (27 per cent) have been “active in the housing market” since the Bank of Canada started raising its interest rate in March 2022.
But more than half (56 per cent) of those would-be homebuyers who responded to the poll indicated they’ve had to postpone their property search amid the central bank’s rapid tightening cycle that’s seen ratcheted-up borrowing costs and curbed growth in home prices.
The Bank of Canada’s policy rate has stood at 5.0 per cent since July 2023, a 23-year high. Policymakers at the central bank have signalled that the benchmark rate has likely peaked – provided inflation continues to decline according to its forecasts – and that the next move is likely a cut.
When that easing cycle begins, more than half of buyers and sellers who say their plans are on hold indicated they would start coming off the sidelines, according to Royal LePage’s survey.
Some 10 per cent said a drop of even a quarter of a percentage point would get them to resume their search. Nearly one in five (18 per cent) of respondents said they’re waiting for cuts of between 50 and 100 basis points, while 23 per cent said they need to see a steeper drop than that before getting back into the market.
One in five sidelined buyers said they are no longer looking to purchase a property, while 12 per cent indicated their plans to buy are unaffected by the Bank of Canada’s rate path.
A separate survey from NerdWallet Canada published last week shows about one in 10 Canadians are planning to buy a home in the next year, with nearly half of respondents saying they plan to buy in the next five years.
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