Parents across Canada have given their children a combined $10 billion over the past year to help them buy their first house, according to a new study by the Canadian Imperial Bank of Commerce (TSX:CM).
CIBC says nearly 30% of home buyers got help from family members during the past year, up from 20% in 2015 and the average amount of a gift has risen steadily.
In 2015, the average amount that parents gave to their children stood at $52,000. In 2020, the average gift had reached a record high of $82,000.
Home prices and sales exploded during the pandemic as mortgage rates fell and people working from home sought out more space.
First-time buyers trying to get onto the property ladder aren’t the only ones turning to the "bank of mom and dad." CIBC says just under 10% of move-up home buyers also got help. While the share of this type of buyer getting gifts is going down, the size of the gifts has ballooned to $128,000.
And the average gift in Toronto, Canada’s largest housing market, during the first three quarters of 2021 is now estimated at more than $130,000 for first-time buyers while mover-uppers enjoyed a gift of almost $200,000.
In Vancouver, those gifts are even larger, averaging $180,000 and $340,000 respectively, according to CIBC.
The bank estimates that $10 billion was gifted over the past year, accounting for 10% of the total down payments on houses in Canada. CIBC says a big chunk of the gift money has come from parents' personal savings.
