Investor sentiment improving, but unease over housing on the rise: study

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Investor sentiment has risen in the past year after hitting the lowest level since the financial crisis in late 2015 – but the country's housing market is leaving Canadians split over whether a home is the right place to park money right now, according to a new Manulife Financial Corp. study.

Two-thousand Canadians 25 years or older filled out an online survey in December for Manulife's semi-annual Investor Sentiment Index, released Monday.

Canadians were most confident in their own home as an asset class when compared with stocks, fixed-income investments, cash, income properties and balanced funds. But the study also reveals growing unease around housing: While low mortgage rates and down-payment savings have 30 per cent of Canadians thinking it's the right time to buy a house, 29 per cent think it isn't, thanks to high prices and a fears of volatility.

"While home ownership remains a priority, Canadians are not necessarily willing to buy at any cost," said Kevin Headland, senior investment strategist with Manulife, in a statement. "They are increasingly aware of affordability, whether it is the down payment amount or monthly payment and interest costs."

The index measures whether investors think it's a good time to buy into an asset class. Overall investor sentiment on the Manulife index had a value of 21, up five points from the December, 2015, survey, but down one point from May, 2016.

The survey found that 45 per cent of Canadians were confident in investing in their own home, but that positivity has slowly fallen since May, 2012, when it was at 61 points.

Homes were followed by balanced mutual funds, with 26 per cent of respondents showing confidence. Investment properties came in at 17 per cent, cash at 15 per cent, stocks at 13 per cent and fixed income at 9 per cent.

Like Canadians themselves, Manulife's latest poll is deeply focused on housing, with respondents' ambitions tinged with anxiety. While 82 per cent of non-homeowners called buying a house their main financial goal, only 11 per said they planned to buy in the next year.

In B.C., where housing prices are top of mind, 42 per cent of respondents said it was a bad time to buy a home. In Ontario, that figure was 32 per cent. Alberta, however, was a comparative beacon of positivity – 38 per cent said it was a good time to buy.

The survey also measured Canadian's thoughts on mortgage interest rates. While three-quarters believe rates will rise this year, nearly two-fifths of investors think they should be lowered, for both fixed- and variable-rate mortgages.