Affordability & job security most important factors for 1st time buyers

New government incentives help but market fundamentals more important,Canadians say.

TORONTO, May 26 /CNW/ - Canadians who are considering purchasing theirfirst home are primarily motivated by lower home prices and very low interestrates, but some require confidence in the economy and their employmentprospects before they will enter the market, according to a report releasedtoday by Royal LePage Real Estate Services. Eighty-six per cent of potentialfirst-time buyers say low interest rates make them more likely to purchase ahome; 81 per cent cite lower housing prices as a motivating factor; while 76per cent cite job security and 64 per cent say a stable economy is animportant factor in their decision to buy.Potential buyers were asked to rank their top incentives for purchasing afirst property. While home prices and interest rates took the number one andtwo rankings, respectively, the third most popular incentive was theFirst-Time Home Buyers' Tax Credit. The recently introduced Home RenovationTax Credit for 2009 was cited by 42 per cent of potential first-time buyers aseither 'very likely' or 'somewhat likely' to impact their purchasing decision.

"When first time buyers stepped out of the market in the fourth quarterof 2008, at the height of the global recession, their absence was profoundlyfelt. Without significant volumes of entry-level homes trading hands, theentire market limped through the winter months. First time buyers are back inforce this spring, and with them the beginnings of a market recovery. Whilethese consumers appreciate government incentives such as tax credits, greaterRSP deduction limits and rebates on home renovations, it is markedly improvedaffordability that is proving to be the powerful drawing card," said PhilSoper, president and chief executive of Royal LePage Real Estate Services."Our survey demonstrates how important affordability factors such as interestrates and house prices are in stimulating demand."

Across the country, potential first-time homebuyers agreed thataffordability was their top consideration, however the survey also revealeddifferences amongst buyers in various regions of Canada. In provinces such asBritish Columbia where high housing prices have kept some buyers out of themarket in recent years, 92 per cent of potential first-time buyers are nowmotivated by low interest rates and 96 per cent say lower home prices arelikely to prompt them to buy.

In Atlantic Canada, where local economies have been resilient in the faceof a worldwide recession and housing markets remain stable, 43 per cent offirst-time buyers say they that job security is a factor in their decision tobuy, while 84 per cent of buyers in British Columbia and Alberta said jobsecurity will influence them.

Atlantic Canadians were less motivated than other Canadians by declininginterest rates, with only 72 per cent saying it will likely prompt a buyingdecision, compared to 86 per cent of Canadians overall. Buyers in Ontario andQuebec rated the Home Renovation Tax Credit as a bigger factor in their buyingdecision, compared to the Canadian average.

Mr Soper continued, "The significant response differences from region toregion show how closely the residential real estate market is tied to broadereconomic trends and consumer confidence. Buying your first home is a majorlife decision, and people are more likely to purchase a home if they feelcomfortable about the state of the economy and confident that they will have ajob to support their new mortgage obligation."