A majority of working Canadians believe their home will grow more in value than their investments over the next 10 years, according to the annual RRSP poll released today by Investors Group.
The poll, which was conducted by Decima Research, found that 59% of non-retired Canadians say they expect their real estate assets will grow more in value than their investment portfolio over the next 10 years.
However, Investors Group says enthusiasm for the real estate market may be misplaced. It notes that over the last 20 years, the S&P/TSX composite total return average annual return as of September 30 is 9.35%. Based on MLS statistics supplied by the Canadian Real Estate Association, the average annual increase in real estate assets in Canada over the last 20 years is 5.1%.
“Rising house values are making homeowners feel wealthier and that can make it more difficult to follow a disciplined savings and investment plan,” says Debbie Ammeter, vp of advanced financial planning for Investors Group. “However, Canadians should be aware that real estate markets are volatile.”
When deciding how much money to put in their RRSPs, respondents indicated that their most important competing financial obligations were:
- reducing debt,36%;
- purchasing or renovating the home, 33%;
- funding family expenses, 22%;
- purchasing a car, 20%; and
- purchasing recreational property, 12%.
Thirty-nine per cent of those surveyed said they plan to increase their contribution over last year, while 44% said it will be the same. Only 11% of respondents expect to contribute less to their RRSP this year.
The poll results also indicate that Canadians have similar attitudes towards investing as they expressed this time last year, while demonstrating considerably more positive views than they held in the fall of 2002. Some 31% say the stock market will go up, while only 9% expect it to go down and 47% say they think it will stay about the same.
Similarly, about 48% of Canadians describe themselves as more or equally enthusiastic about investing in stocks and mutual funds this year than last year. That’s also an improvement over the 30% who were equally or more enthusiastic compared to the prior year in 2002.
The poll also found that only 26% of RRSP investors say they invest in their RRSP on a regular or monthly basis. Of the remaining RRSP investors, two thirds (69%) will wait until January or February to make their contribution.
The survey results are based on a Decima TeleVox national telephone survey conducted with a representative sample of 2,035 adult Canadians between September 11 and 12. A sample of this size will provide results that can be considered accurate for the population overall to within plus or minus 2.2%, 19 times out of 20.