First National Financial LP

Residential Market Commentary - The light at the end of the tunnel shines on more spending

  • First National Financial LP

As COVID-19 continues to be pushed down in Canada, consumer spending is expected to go up.  The latest survey by the Bank of Canada suggests that will lead to an even greater demand for homes.

The Bank’s Survey of Consumer Expectations, for the second quarter of 2021, indicates there is a general, overall optimism about the end of the pandemic and that consumers are prepared to do some spending as the virus fades and health restrictions are lifted. 

The survey indicates 40% of respondents managed to save more money than usual during the pandemic.  That group expects to spend about 35% of those savings over the next 2 years.  They indicate that much of that spending will be on activities that have been restricted during the pandemic, such as dining out.  Generally, respondents plan to put 10% of their savings toward debt repayment and another 10% toward a down payment on a home.

The number of people saying they plan to buy a home rose to 14% in the second quarter, up from 11% in Q1.  Much of that was driven by renters, with 20% saying they want to get into the market compared to 11% of current owners who intend to make a purchase.

About 80% of the respondents who have done work from home during the pandemic say they expect to continue with that.  The Bank sees this as consistent with the shift in demand for larger properties, away from city centres. 

The Bank of Canada survey also shows consumer expectations for house price growth continued to edge up across the country.