Seven in 10 Canadians who are planning to buy a new home within the next year are concerned that they will be paying a purchase price higher than the actual market value. Seven per cent of Canadians plan to purchase a home or property in the next year. These are among the findings of a national survey conducted by Ipsos-Reid on behalf of the Appraisal Institute of Canada (AIC).
Thirty per cent of respondents who are not planning to purchase a property within the next year say the fear of paying a higher price than the market value has influenced their decision to purchase a home to a great extent (12 per cent) or some extent (18 per cent). The poll found that 34 per cent of those surveyed are not influenced at all by the fear of paying a higher purchase price in the next year.
“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,” says Keith Lancastle, CEO of the Appraisal Institute of Canada (AIC).
“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,” says AIC president Scott Wilson.
Almost three-quarters of survey respondents who are planning on buying a property soon are somewhat likely (44 per cent) or very likely (30 per cent) to hire a real estate appraiser if they were to buy or sell a property in the future.
