Photo: James Bombales

2018’s headlines were dominated by a new mortgage stress test, stricter foreign buyer taxes for two major markets and the ongoing effects of dipping oil prices, all of which took a toll on the Canadian housing market.

While many of these stories will continue to develop in the new year, a whole new list of issues will also start to dominate the news cycle.

For a closer look at which developments will take over your newsfeed in 2019, Livabl has broken down some of the top headlines you’ll likely see in the new year.

Climbing interest rates are taking a bite out of Canadian housing activity

The Bank of Canada has made it perfectly clear that it plans to continue to hike interest rates in 2019. After years of historically low rates, the Bank has been slowly-but-surely raising the overnight rate since the spring of 2017. Last month, it raised it to 1.75 percent.

The big banks will be sure to raise mortgage rates accordingly, pushing many would-be home buyers to the sidelines, and putting downward pressure on home sales and prices.

“It’s difficult to identify how much of the recent slowdown in housing activity has been due to tighter mortgage rules versus higher interest rates,” writes CIBC economist Royce Mendes, in a recent note. “But, based on prior estimates of the effects of the rule changes alone, the slowdown in lending has been more precipitous.”

The market has already started to feel the squeeze of higher rates — after a summer of warming activity, sales numbers dropped off in October, in what many experts are saying is a sign of things to come.

“Given the lags in monetary policy…the impacts of rate hikes will actually become more apparent [in the new year],” writes Mendes.

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Montreal’s strong job market is pushing housing activity sky high

While all markets should feel the effects of higher rates, some will fare better than others. Montreal, with its booming job market and strong immigration numbers, is posed to continue its strong performance in 2019.

Sales jumped 11 percent year-over-year last month, according to the Greater Montreal Real Estate Board, the highest October sales performance on record. That makes 44 months of consecutive sales increases, and a 22 percent rise in condo sales.

What’s more, the Canada Mortgage and Housing Corporation recently noted that the city’s housing market could be at risk of overheating.

“Montreal’s resale market is close to overheating, creating significant upward pressure on prices as a result of a sharp tightening between supply and demand,” reads the CMHC release.

All that leads industry watchers to believe that the city will continue to post sales and price increases in 2019.

Strong population growth is keeping the Toronto housing market balanced

The Toronto housing market struggled this year under the effects of stricter mortgage rules and higher interest rates. But even as the market cools from its high in 2017, one thing is keeping prices relatively high — strong migration numbers.

According to a recent study from, 59 percent of current non-owners plan to buy a home in the next two years. Many of those would-be buyers will look to the GTA market, one of Canada’s biggest economic hubs, as their new home.

In fact, TD economist Rishi Sondhi is predicting that population growth in the area will keep the market balanced in the new year.

“Toronto’s market has been balanced for over a year now, manifesting in slower price appreciation,” he wrote in his most recent note. “Indeed, the Toronto Real Estate Board reported that average prices were up…3.5 percent year-over-year in October.”

That slow-but-steady growth should continue in 2019, says Sondhi.

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