While real estate has long been seen as a “safe” way to invest, it appears British Columbians are increasingly uninterested in using housing as a form of investment.
Over the past year, B.C. residents say they feel real estate is a less attractive investment than they did last year, according to a Manulife Investor Sentiment index, which measures whether or not Canadians think it is a “good time” or a “bad time” to invest in certain asset classes. The investor sentiment index for this type of investment dropped 13 points in B.C. since November 2014 – the biggest drop in Canada, where the average decrease was three points.
“Canadian investors are increasingly viewing housing as a less attractive investment, [with the index] having dropped three points in the last year,” said Manulife Asset Management senior economist Frances Donald.
“What is most interesting from the survey is the ongoing decline in the Canadian appetite to invest in their own home.”
It may come as no surprise that B.C. investors are turning away from real estate as a form of investment. In Vancouver in particular, home prices continue to soar, making it more difficult for many residents to enter the real estate market. In the past year alone, the average selling price for a detached home increased 28% to a benchmark of almost $1.3 million.
So if they aren’t investing in real estate, what are British Columbians doing with their money? It appears that many feel saving cash is the best option, with the index for that option increasing 10 points.
As for the rest of Canada, investor sentiment across all investment types has dropped to 16, the lowest point since the financial crisis when the index plummeted to 11. The highest point the index ever reached was in 2006, when it got as high as 34.
Ontario and the Atlantic provinces had the most optimistic investors, with an index of 20. Quebec (+9) and Alberta (+14 – down five points since May 2015) had the lowest optimism.
As for investment type, over the past six months, the investor sentiment index for mutual funds fell eight points, exchange-traded funds and balanced mutual funds both fell seven points.
@EmmaHampelBIV
