TORONTO — Home sales are not going to be as big of a boost to the Canadian economy this year as they were in 2016, the Canadian Real Estate Association said Monday as it released its latest batch of figures.
The real estate association says home sales were up 2.2 per cent in December from the previous month, rebounding partially from a big drop following the introduction of new mortgage rules.
The number of homes trading hands posted the biggest monthly retreat in more than four years from October to November, CREA said.
“New regulations mean that in order to qualify for a mortgage, home buyers will either have to save longer for a bigger down payment or purchase a lower priced home,” CREA’s chief economist Gregory Klump said in a statement.
“In urban centres where the latter are in short supply, that’s likely to translate into fewer sales.”
Ottawa moved to tighten mortgage rules in October, including requiring that all insured mortgages undergo a stress test to determine whether borrowers are still able to make mortgage payments if interest rates rise or their income declines.
Such tests were previously not required for fixed-rate mortgages longer than five years.
TD economist Diana Petramala says it will take some time before the full impact of the changes materialize.
“Even though the mortgage regulations have already kicked in, they do not apply to those who had a pre-approved mortgage prior to the Oct. 1 implementation date,” Petramala said.
“As such, the effect may not be fully felt until January.”