Written by 11:30 AM Real Estate • One Comment Views: 8

Mortgage Regulations Cool March Home Prices

house price decline

Housing legislation in Ontario and British Columbia, introduced in 2017 to cool their overheated urban markets, has continued to do just that, while dragging down average home prices year-over-year across the country.

“Government policy changes have made homebuyers and sellers increasingly uncertain about the outlook for home prices,” said Canadian Real Estate Board (CREA) President Andrew Peck. “The extent to which these changes have impacted housing market sentiment varies by region.”

Ontario’s Fair Housing Plan and B.C.’s newly expanded foreign buyers and speculation taxes have created uncertainty in the market since introduced, compounded by OSFI’s tightened mortgage lending rules.

National home prices in March were down 10.4 per cent year-over-year to $491,000, according to CREA.

Excluding both the Greater Vancouver and Greater Toronto areas, however, the year-over-year decline is reduced to just 2 per cent, for an average national home price of $383,000.

Vancouver home prices, despite the regulations and slower sales, have continued to rise year-over-year–mostly due to the high demand for condos–and is the only larger metropolitan market where the the average price remains over $1 million. GTA prices, meanwhile, have plunged 14.4 per cent.

Prairie markets remain stable in Calgary and Edmonton, but have declined in Saskatoon by 6 per cent. The east coast is doing well, with Halifax stable and Greater Moncton Area increasing about 6 per cent.

The winner for the Canadian city with the largest annual price increase goes to Ottawa, at 6.2 per cent, with Montreal as the runner-up posting a 3.9 per cent increase.

These two cities are also notable for being the only urban centres to see increased sales from last year.

Sales this quarter are the slowest they’ve been since the first quarter of 2014, and down almost 23 per cent from their peak last March.

Ottawa and Montreal deviate from this trend primarily because detached homes are still affordable and also because of spillover from the GTA, not to mention international buyers wanting to avoid the foreign buyers taxes.

Due to the new OSFI rules that came into effect this January, buyers are finding it hard to borrow enough to purchase more expensive homes. Instead, the new lending rules have likely forced them into less expensive markets, or encouraged them to buy before the rules tighten even further.

“Recent changes to mortgage regulations are fuelling demand for lower-priced homes while shrinking the pool of qualified buyers for higher-priced homes,” said Gregory Klump, CREA’s chief economist. “Given their limited supply, the shift of demand into lower price segments is causing those sale prices to climb. As a result, ‘affordably priced’ homes are becoming less affordable, while mortgage financing for higher-priced homes remains out of reach of many aspiring move-up homebuyers.”

Check out the infographic below for a snapshot of some of the country’s key housing markets:


Danielle Kubes is a content writer for Zoocasa.com, a leading real estate company that combines online search tools and a full-service brokerage to empower Canadians to buy or sell their homes faster, easier and more successfully. Home buyers can browse real estate listings such as condos for sale in Toronto, or Mississauga condos on the website or the free iOS app.

Visited 8 times, 1 visit(s) today

Last modified: April 23, 2018

Danielle Kubes is a personal finance writer based in Toronto.