Photo: James Bombales

After two years of holding court at the top of global price rankings, the Canadian housing market took another price tumble last quarter.

While the country’s housing market held fourth spot on property consultancy Knight Frank’s quarterly global price index in 2016 and 2017, it’s now fallen all the way to number 44 of the 57-city list.

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The decline is thanks to the introduction of foreign-buyer taxes in BC and Ontario, along with stricter mortgage qualification rules and steadily rising interest rates.

Of course, performance varies from city to city. Vancouver has had a particularly difficult year, with a stricter foreign buyer tax introduced this spring as the market was already struggling to adjust to the change in mortgage rules.

“Of those countries where a rate rise has taken place in 2018, a number have a significant gap between their strongest and weakest performing city,” reads a Knight Frank release from last quarter.

While the cooling activity may have eaten into Canada’s standing in the ranking, it’s certainly what policy makers were hoping for when they introduced foreign-buyer taxes, stricter mortgage rules, and higher interest rates. The Bank of Canada, which hiked the overnight rate to 1.75 percent in October and will likely do so again in the new year, has made it clear that a more balanced housing market was a desired outcome.

“Household credit and regional housing markets appear to be stabilizing following a significant slowdown in recent quarters,” the Bank wrote, in its most recent release. “The bank continues to monitor the impact on both builders and buyers of tighter mortgage rules, regional housing policy changes, and higher interest rates.”

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