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TORONTO, ONTARIO--(Marketwired - April 13, 2016) - A slight majority (51 per cent) of Canadian millennials own their own home and, of those who rent, most (76 per cent) expect to buy a home within the next five years. But affordability is a major concern for these first-time buyers, according to a new report released by BMO Bank of Montreal and conducted by Pollara.

As housing prices continue to rise, millennials are striving to save enough money for a down payment. But almost one third (29 per cent) don't think they'll ever be able to afford a home.

According to the survey, millennials expect they will have to spend $350,000, on average, to buy their first home. These amounts range from about $235,000 in Quebec to more than $478,000 in British Columbia - home to Canada's hottest real estate market, Vancouver. To make such a purchase, respondents indicated that they expected to raise about 15 per cent of the purchase price for their down payment - or, roughly, an average of $53,000. Most (65 per cent) indicated that they would rely, to some extent, on parents or other family members for financial assistance - for as much as 10 per cent of the purchase price, although most don't know.

Average Price & Down Payment Millennials Expect to Spend on First Home *(as of March 2016)
ATL	QC	ON	Prairies	AB	BC
$253,990	$234,735	$415,110	$264,388	$386,480	$478,113
13.39%	12.82%	15.97%	20.56%	15.2%	15.85%

Of those who are currently renting, 64 per cent are trying to save until they have enough for a down payment on a home. One fifth (20 per cent) are planning to buy with someone (partner, friend, relative, etc.) so that it's more affordable.

In addition:

• More than half (60 per cent) are having difficulty saving for a house that meets their wants;
• One quarter (25 per cent) are waiting for housing prices to drop, and another 37 per cent are concerned about rising real estate prices; and
• Almost half (42 per cent) said it's hard to find an affordable home in their desired location.

"In the 1980s and 1990s, older homes on large suburban lots were affordable options for younger buyers. Now, those properties have become relatively scarce and attract premium prices, leaving condos and townhouses as the new 'affordable' options," said Robert Kavcic, Senior Economist, BMO Capital Markets.

When asked what kind of property they hoped to purchase, respondents indicated:

• Detached home (51 per cent)
• Condominium or loft (29 per cent)
• Townhouse (27 per cent)
• Semi-detached home (20 per cent)

By comparison, the 51 per cent of millennials who have already purchased their first home have tended to buy detached houses (46 per cent) or a condominium/loft (23 per cent). These millennials paid an average of $295,458, with a 16.5 per cent down payment. However, many (26 per cent) said they put down only 5 per cent of the purchase price; even then, 16 per cent noted that they went over budget.

"Our report revealed that Millennials certainly recognize the value of purchasing a home as a much better investment than renting, but they also appreciate that the home-buying process is heavily shaped by affordability," said Sameh Elrefaei, Managing Director, Personal Lending Products, BMO Bank of Montreal. "Setting a realistic expectation for financial help, creating a detailed savings plan and building both a before- and after-purchase budget can help determine what is truly affordable."

Prospective Millennial Home-Buyers Most Concerned with Affordability of Monthly Mortgage Payments

Half of those surveyed cited budget as their most important consideration when buying a home (49 per cent). When considering how much they can afford for a new home, two thirds (67 per cent) consider the amount they can afford in monthly mortgage payments, while another half (54 per cent) consider how much of a mortgage a bank will give them. In addition, over half (57 per cent) of millennials are worried they might not be pre-approved for a mortgage.

"It's important that first-time buyers - no matter their age or knowledge level of the real estate market - understand that seeking professional financial advice is a critical step before making such a monumental purchase," said Mr. Elrefaei. "A mortgage specialist or financial advisor can help you set a budget, navigate the mortgage pre-approval process and determine whether a fixed or variable rate mortgage is right for you, so you can make the best possible decision."

Mr. Elrefaei added that the BMO 5-Year Smart Fixed Mortgage with an interest rate of 2.59 per cent can help home buyers save thousands in interest payments and become mortgage-free faster. To find out more information on the BMO Smart Fixed Mortgage or for help and advice on the home buying process, please click here.

The survey results cited in the Bank of Montreal Millennial Home Buyer Report, conducted by Pollara, are compiled from a random sample of 2,079 Canadian19 to 35 years of age between March 14^th and 17^th, 2016. A probability sample of this size would yield results accurate to ± 2.2 percent, 19 times out of 20.

About BMO Financial Group

Established in 1817, BMO Financial Group is a highly diversified financial services provider based in North America. With total assets of $699 billion as of January 31, 2016, and close to 47,000 employees, BMO provides a broad range of retail banking, wealth management and investment banking products and services to more than 12 million customers and conducts business through three operating groups: Personal and Commercial Banking, Wealth Management and BMO Capital Markets.