According to the survey, of the people who do not own property yet, 88.6% say they want to step on the property ladder. Among them, 70% want to use the tax-free First Home Savings Account (FHSA), which allows Canadians 18 to 40 years-old to deposit $8,000 per year, with a lifetime contribution of $40,000, to save for a down payment for a first home.
Among the 30% who do not plan to use the tax free savings tool, the reason is surprising: 54% do not understand the advantages of the FHSA. The other 46%? They don’t believe they will have sufficient funds to save to contribute. Consequently, 72.07% of Canadians who do not yet own a home, but want to eventually own a first property think that the FHSA will have little to no positive impact on their ability to buy a first home.
Canadians will have to get creative to save for a down payment. That’s because 82.7% of respondents who don’t yet own a home, but aim to, do not anticipate getting money for a down payment from the “Bank of Mom and Dad” in the form of a gift or loan.
Instead, to get there, 32.8% of those who want to put money into a FHSA in 2023 plan to cut expenses, while 16.8% will reduce their RRSP contributions and 12.8% will reduce their TFSA deposit and another 9.6% will take the money out of a TFSA. Likewise, a small number of people, 2.4% will cut their contributions to a Registered Education Savings Plan (RESP) and 3.2% will take it out of their RRSP.
Still, Canadians are planning far in advance for their future. To save a down payment, 22.93% think that it will take 5 years, 5.6% think it will take 10 years, while 6.42% think it will be at least 15 years.
The most fortunate buyers continue to be those who get help from their parents. Among the roughly 17.3% of respondents who will receive support, 20% think that they will get between $5,000 and $10,000 from their parents. The rest is spread out, with a combined 30% of people anticipating an amount between $15,000 and $30,000 and 15% expecting between $50,000 and $100,000. Finally, 10% of respondents are expecting more than $100,000.
A lucky 47.06% of people will not have to pay anything back to their parents. For those who will receive the money as a loan, when properly documented, need to remember to add this to their debt load.
“The FHSA is a tax-free savings account, but it doesn’t mean that it actually makes saving for a down payment any easier, especially in hotter real estate markets. What the survey found is that the most effective source of a down payment is the Bank of Mom and Dad. Still, not everyone is that fortunate,” said Hardbacon Editor in Chief, Stefani Balinsky.
This survey was conducted online by Hardbacon from April 15 to April 20, 2022. They surveyed 300 people, all of whom were 18+ and living in Canada.
Hardbacon helps Canadians plan, budget and invest, while also enabling users to compare different financial services such as credit cards, bank accounts, online brokers and robo-advisors. Hardbacon is available for download in the App Store and Google Play Store.