Canadian policymakers had a busy year in 2016 as they put forward a number of mortgage-related rule changes—and more may be on the way, suggests Canada’s biggest cooperative financial group.
These recent changes include the BC government’s 15-per-cent tax on non-residents buying residential property anywhere in Metro Vancouver and tougher nationwide stress testing applied to those applying for an insured mortgage, a move Finance Minister Bill Morneau announced late last year.
“Have we finally achieved the right dose of restrictive measures, and are we on the verge of a slowdown in the real estate market?” asks Benoit P. Durocher, a senior economist with Desjardins, in a recent report. “The housing market slowdown that is especially hoped for in the Toronto and Vancouver areas is not yet certain,” writes Durocher.
Canadian home sales have dropped by 0.7 per cent in the past three months, but prices climbed 0.5 per cent over the same period, according to Desjardins. While the Vancouver market has showed signs of cooling, the same can’t be said for the Greater Toronto Area, which is Canada’s most active market, and as a result, has a considerable impact on national figures.
Home prices in the GTA increased 2.6 per cent from October to December. “In other words, it is not yet certain how well the new restrictions are working,” says Durocher. “Under these conditions, governments will have to remain vigilant and we cannot rule out the possibility that further restrictions will be introduced if the housing market remains lively.”