Canadian home ownership more costly than thought, BMO report says

New home hunters be warned: Theprice you expect to pay for a new home is likely $83,556 short of what you'll actually end up spending, according to a new survey.

TheBank of Montreal's Fall Home-Buying Report, releasedFriday, says four in 10of potential homebuyerssurveyed 43 per cent can expect to payan average 21 per cent more (to 483,397) than when they first started looking.

Only five per cent of those in the survey actually dropped their price range.

The disparity between expectation and reality is unsurprisingly widest in Toronto. Most of those surveyedinitially planned to spend about $630,000, but with demand exceeding supply and prices rising steadily each month, they have to inflate their price point by an average of $100,000.

• Average Canadian house price rises 5.3% to $398,618

It's a similar story in the country's other hot real estate markets.

Home hunters raised their budget by:

• 17 per cent ($48,883) in Montreal.
• 19 per cent ($89,389)in Calgary.
• 16 per cent ($81,095) in Vancouver.

"Housing prices in Canada have risen 18 per cent over the past four years," said Martin Nel, vice-president of Personal Banking Products at BMO. "As prices rise, househunters need to ensure their savings are keeping pace, especially first-time buyers who don't have the leverage of a current house in the market."

Detached homes too expensive

Most home hunters (55 per cent)also change their preference for the type of dwelling they'd like to purchase based on their first assessment of the market.

Condos and detached houses often start as the favoured investment. But with concern growing over the condo market overheating, and more detached homes topping $1 million, they're being swayed towardssemi-detached homes and townhouses instead.

"By shifting toward semis and townhomes and away from detached and condos, buyers appear to want their cake and eat it too a backyard for the kids to play in, but also something that won't break the budget, notably in Vancouver and Toronto," said BMO senior economist Sal Guatieri.

The survey was conducted by Pollaraearlier this month and included about 1,000 adult Canadians who planned to buy a new home within the next five years.

Data was weighted using past homebuyer research to be representative in terms of age, gender and region.