More and more Canadian parents intend to help their adult children buy a home, despite the impact it will have on their own financial futures, says the Housing Affordability Survey, a Leger poll commissioned by FP Canada.
The survey found that 48% of Canadian parents with children under the age of 18 plan to assist their children with the future purchase of their first home. This is an increase from 2017 when a FP Canada survey found that 43% of parents were planning to help their children purchase their first home.
Among parents with children over the age of 18, 24% say they have already helped their kids purchase a home. Regionally, those in Atlantic Canada (32%) and Manitoba and Saskatchewan (32%) are slightly more likely to have helped with the purchase.
The survey also indicated that a growing proportion of Canadians expect that providing such financial assistance will have repercussions on their future. Thirty-nine per cent say they expect that helping their children buy a home will postpone their own retirement, which is up from 27% in 2017.
Thirty per cent of those surveyed say they plan to tap into their retirement savings to help with the purchase, an increase from 21% two years ago. Meanwhile, 26% say they intend to tap into their home equity to assist their children, up from 23% in 2017.
An increasing number of parents also expect the financial support to impact their debt levels: 34% say they expect helping their children buy a home will prevent them from paying off debt, up from 22% in 2017.
“With house prices at unprecedented levels in many regions of the country, it’s nearly impossible for many young Canadians to get into the market without assistance from their parents. That’s putting pressure on parents to take drastic steps to help their children buy a home, including tapping into their retirement savings or their own home equity,” says Kelley Keehn, author, personal finance educator and Consumer Advocate for FP Canada. “Even though it’s natural to want to help your children, it’s essential to carefully consider the impact on your own financial security before helping with such a huge purchase. A CFP professional can help you build a plan to balance all your financial priorities.”
Helping with rent
The survey also showed that many renters are depending on their parents for financial assistance. Thirty-five per cent of parents with children over 18 say they have already assisted with the cost of rent. Those in Atlantic Canada (48%) and Alberta (41%) are more likely to have helped with the cost of rent.