According to a new survey conducted by Ipsos-Reid on behalf of the Appraisal Institute of Canada, 69% of Canadians who are planning on buying a new home in the next 12 months are concerned to come extent that they will be paying more than actual market value. Just over half of those who responded said they are concerned to some extent, while 15% said to a great extent.
“Canadians who are buying a home are generally making the most significant investment of their lifetime,” said Keith Lancastle, the CEO of the Appraisal Institute of Canada. “In a ‘hot market’ – particularly when there are multiple offers – purchase prices can be inflated. In those cases, the buyer is essentially being asked to pay more than the true value of the property. This has potential implications for the buyer should they choose to sell this property in the future, or the lenders who provide mortgage financing.”
Seven per cent of Canadians plan on buying a home in the next year, while 34% of Canadians said they are not at all influenced by worries about paying a higher purchase price.
The President of the Appraisal Institute of Canada, Scott Wilson, said that, “As we saw in the global financial crisis, over-inflated real estate prices had a significant impact on the economy in a number of countries. It has been shown to affect the stability of a country’s lending system, the real estate market, and – most importantly – consumers. The sound regulatory system and market valuation fundamentals within Canada’s real estate sector were the reasons that Canada fared better than so many other countries.”