Are you a Canadian having a hard time buying your first home? Have you tried getting wealthier parents? CIBC crunched its numbers and found the role of parental wealth is playing a more important role for both first-time buyers and “mover uppers.” Canadian real estate has become so unaffordable that now a third of first-time homebuyers require a 6-figure gift from their parents—up considerably from just a few years ago.
A Third of Canadian First-Time Home Buyers Require Parental Wealth
Canadian first-time buyers require a little, okay—a lottle help from friends and family. Nearly a third (31%) of first-time buyers needed a gift to help buy a home in the bank’s 2024 YTD data. That’s up from 20% back in 2015, which seemed high back then.
Canadian First-Time Homebuyers Increasingly Require Parental Help
Source: CIBC.
The amount of money gifted has also seen a sharp increase. The average gift this year was a whopping $115,000, up 73% since 2019—right before the cuts. One would expect the amount of the gift to increase, but the amount as well as the share of buyers requiring parental help? That’s a compounding problem that becomes much harder to fix.
Even Canadians Upgrading Their Home Need Parental Help
Relying on parental wealth to secure a home isn’t just the domain of first-time buyers. CIBC found that those upgrading their homes increasingly rely on parental wealth too.
Canadians Moving Up The Property Ladder Need Parental Help Too
Source: CIBC.
The share of homebuyers upgrading their home with a parental gift climbed to 12% of purchases in 2024. That’s up 3 points from 2015, and as you might have guessed—those gifts got a lot larger too. The average gift reached $167k, rising 97% since 2019. Yowza.
Homebuyers In BC & Ontario Need A Lot More Help
First-time buyers in BC and Ontario were even more dependent in these pricey provinces. The share that used a gift was roughly 36% in both provinces, 5-points higher than national data. The average gift’s dollar value was also significantly more expensive in BC ($204k), and Ontario ($128k).
First-Time Buyers In BC and Ontario Need Much Wealthier Parents
Source: CIBC.
As one might guess, those purchasing an upgrade also required a hefty gift. The share of buyers upgrading with a gift was roughly the same as the national rate in both provinces. However, the average gift was significantly higher in both BC ($230k) and Ontario ($189k).
“Homebuyers relying on a wealth transfer from their parents in order to purchase a home is becoming the norm in Canada,” explained Benjamin Tal, deputy chief economist at CIBC World Markets, and the co-author of the report.
He adds, “… this phenomenon is helping to mitigate the bite of housing inflation for buyers, but unfortunately it is also contributing to a widening of the already wide wealth gap in Canada.”
It may just be a sign of the times, even the country’s finance minister required parental help to purchase their home, but it’s a problematic shift for young adults. Homeownership is the largest source of Middle Class wealth in the country, and it’s increasingly determined by parental wealth. Since most immigrants are looking for class mobility, it’s a big shift to the country’s value proposition. Moving to Canada will be increasingly seen as a lateral shift if this continues, while developing economies become advanced ones.
