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Winnipeg Free Press - PRINT EDITION
Housing downturn predictions overblown: analysis
A downturn in the housing market may not be as bad as feared because the important 25-34 age group will continue to buy houses -- some with help from their well-off parents, says a senior economist at CIBC World Markets.
The analysis takes aim at a theory that population growth won't be strong enough to sustain demand, putting downward pressure on housing prices that have risen dramatically during a years-long period of low interest rates.
"This demographically driven fear is much ado about nothing," Benjamin Tal, deputy chief economist at CIBC World Markets, said Thursday.
Demographic projections suggest there will be fewer Canadians under the age of 25 and between the ages of 45 and 54, but Tal said those groups account for a small portion of homebuyers.
Tal said the number of people aged 25 to 34 -- the age group that makes up the vast majority of first-time buyers -- will continue to grow.
While that growing population of young people may have to postpone buying a house for a couple of years due to their student-debt level, their parents can help them out, Tal said.
"This is actually the first generation that the parents are better off than the kids, and those parents will write a nice cheque," he said. Tal also sees immigrants continuing to buy homes.
But Capital Economics economist David Madani said while the 25-34 age group is helping drive sales, they are more vulnerable to downturns. Madani said average house prices in major cities such as Toronto, Vancouver, Montreal, Ottawa and Calgary could drop 25 per cent in the next couple of years.
-- The Canadian Press
Republished from the Winnipeg Free Press print edition August 24, 2012 ??65530
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