Photo: James Bombales
There’s no doubt that tougher mortgage rules and an interest rate hike took a serious bite out of the Canadian housing market in January, as national home sales fell 14.5 per cent. But, according to one economist, that number doesn’t tell the whole story.
“Unlike Toronto and even higher-priced Vancouver, housing markets in the rest of our country remain affordable and healthy,” writes BMO senior economist Sal Guatieri, in a recent note.
According to Guatieri, the worrisome national home sale numbers are largely result of big sales drops in Toronto and Vancouver.
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“Tougher mortgage rules look to deepen the correction in Greater Toronto’s detached housing market, where prices are down moderately from a year ago and roughly 12 per cent since the spring,” he writes. “But…housing markets in the rest of the country…should see relatively little impact from the new mortgage rules.”
He highlights two markets that are set to perform particularly well heading into the spring.
“House prices in Ottawa and Montreal have picked up and could lead the nation this year,” writes Guatieri.
It’s a prediction echoed by TD economist Rishi Sondhi, who says that many more affordable housing markets are unlikely to be affected.
“The outlook is comparatively favourable for Quebec and the Maritime provinces, where good affordability will limit the impact of higher rates and [and the new mortgage rules],” Sondhi told BuzzBuzzNews.
But it likely won’t be a good year for the typically hot BC market, which, after having adjusted to a foreign buyer tax in August 2016, had new rules imposed last month.
“BC will need to digest new housing measures announced by the provincial government, including an increase in the foreign buyers’ tax to 20 per cent from 15 per cent, and an expansion of the tax to areas beyond metro Vancouver, as well as a speculation tax on nonresident owners,” writes Guatieri.