The youngest age group of first-time homebuyers accounts for a large share of purchases in Ontario, according to new data, raising questions about how unaffordable housing actually is in the country’s most populated province.
Amongst solo first-time buyers of condos, those 30 years and younger were responsible for 41.5 per cent of the purchases over the past five years, according to a report by Teranet, the province’s land registry agency. That same age group of solo buyers also accounted for 38.5 per cent of single-family house purchases over the same time period, according to the data.
Teranet called this a surprising trend given the affordability challenges younger buyers typically face in Ontario, and said it may be indicative of financial support from family or other sources.
The youngest cohort’s buying pattern is similar to older first-time buyers between the ages of 30 and 40, who are typically earning higher wages.
Among solo first-time buyers of condos, this older group accounted for 42.1 per cent of purchases over the past five years, according to the Teranet report, and 40 per cent of house purchases.
The report did not provide data from previous years, so it is not known how under-30-year-olds fared in the housing market when homes were cheaper.
The report also found that in recent years, more first-time home buyer condo purchases have been made by individuals and not by couples.
That reversed a pattern that began after 2015 when fewer buyers bought a condo by themselves. At the time, stricter mortgage rules were being introduced, requiring buyers to prove they could meet their mortgage payments at higher interest rates.
Emily Cheung, Teranet’s director of data analytics and insights, said the recent change “may be suggestive of financial help from alternative sources, but we do not know this is the cause definitively.”
The report said that first-time buyers of condos favoured already built or resale properties. Only 20 per cent of first-time buyers were choosing new properties.
In general, older condos have more space and are cheaper than new product. Because of that, buyers have been gravitating toward them and shunning preconstruction condos. That has contributed to the worst slowdown in preconstruction sales in the Toronto region since the 1990s.
In an attempt to help younger Canadians enter the housing market, the federal government has taken a step toward cutting the price of preconstruction homes. It has proposed legislation that would waive the 5-per-cent federal goods and services tax for first-time preconstruction homebuyers as long as they plan to live in the property.
The typical home price in Canada was $693,300 in July, according to Canadian Real Estate Association data. That is up from $567,500 five years ago and $437,100 in 2015.
In the Toronto region, the country’s most populated area, the typical home price was $981,000 in July. That is up from $849,900 five years ago and $589,000 in 2015, according to CREA data.