Canadians plan to spend more than $46 billion this year to renovate their homes, continuing their property spending spree even after the expiry of the home renovation tax credit, a new BMO survey found.
The figure is slightly higher than the $45.3 billion spent last year and $40.9 billion in 2009. About two-thirds of homeowners said they plan to renovate over the next two years, the bank said.
The study shows Canadians are still willing to spend to upgrade their property even without tax incentives. The federal government introduced a credit for home renos as part of its package of stimulus measures to drag the economy out of recession. It expired in January 2010.
"We have seen quite a strong increase in reno activity in the first quarter and that has contributed to overall economic growth," said BMO Capital Markets senior economist Sal Guatieri. "The resale market is quite strong so people are fixing up older homes and upgrading the ones they are living in."
The focus on existing properties also comes as new building activity shows signs of slowing. Housing starts are likely to stabilize in 2011 at about 179,500 units, according to Canada Mortgage and Housing Corporation figures released Monday. Actual housing starts for 2010 totalled 189,930 units.
"I would describe home building as having normalized," Guatieri said. "That's a good thing because if the housing market cools down we won't get stuck with a big overhang of unsold houses."
The BMO report found respondents' main motivation for upgrades was seeing a friend or neighbour's projects, with one-quarter saying this was the major factor in their decision. Twenty percent said television programs had stirred the urge to make changes, while 16% got their impetus from newspapers or magazines.
Of those planning renovations, 90% said it is to improve their lifestyle, and 79% said it is to improve the value of their home.
The Leger Marketing survey was completed online from March 10-21 with a sample of 1,508 Canadian homeowners between the ages of 25 and 45.