Owning a home is becoming a pipe dream for many millennials in Canada, according to a survey released Thursday by KPMG.
Soaring house prices and rising personal debt are making it impossible for many Canadians in that age group to ever afford to buy a home.
“The combination of rising house prices, high levels of personal debt and annual incomes that are just a fraction of the cost of buying a home compared with their parents’ generation, is pushing the dream of home ownership out of reach for many millennials,” said Martin Joyce, Partner, National Leader, Human & Social Services, KPMG, in a statement. “This is particularly challenging in the markets of Vancouver and Toronto.”
Key findings of the poll on millennials who are between the ages of 23 and 38 and represent the largest population generation in the country:
- 72 per cent of millennials say their goal is to own a home;
- 46 per cent of millennials say owning a home a pipe dream;
- 46 per cent of millennial homeowners, received a financial boost from their parents to buy a home;
- 38 per cent believe their house won’t be worth as much in the future
“As the most educated generation, millennials have incurred high levels of student debt and those who have been able to enter the housing market have taken on larger mortgages relative to their incomes than those who came before them, according to Statistics Canada,” said KPMG. “While millennials have higher incomes than previous cohorts, in part because of their higher educations, they are not necessarily better off, the poll indicates.
“Debt-to-income ratio is a key financial indicator and, for young millennials, that now stands at 216 per cent, far exceeding the 125 per cent for Gen-Xers and 80 per cent for baby boomers at the same age – primarily because of mortgage debt. Wage growth has also been slower than expected, the Bank of Canada has warned. While millennials have proven to be willing to incur higher levels of debt to attain home ownership, they are less optimistic about the payoffs, the KPMG poll finds.”
It said millennials now take an average of 13 years to save for a 20 per cent down payment, while it took their parents just about five years in 1976, according to a Canadian Mortgage and Housing Corp. report.
“That’s eight fewer years that millennials might have for saving more for their retirement,” said Joyce. “If they do manage to save up and buy a house now and delay retirement savings, our poll finds 65 per cent of millennials fear they won’t have enough saved for retirement.
“It seems pretty clear that millennials are in a unique situation in terms of their ability to purchase a home – which has historically been a foundation for retirement stability – and most Canadians agree that the government has a role to play in making it a more achievable dream for many of them. It’s time to have a national conversation.”
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