The Canada housing market has undergone some changes recently, and the impact of these changes is expected to be felt well into 2019. But what those effects will be is still largely unknown. Experts are making predictions about what both buyers and sellers can expect in the upcoming year and beyond.
Mortgage Stress Test
Perhaps the most significant change to the Canada housing market is the implementation of the mortgage stress test. The move is drastically affecting those applying for mortgages. Launched in January 2018, it requires many homebuyers to apply for mortgages at higher rates than contracted mortgage rates. This test was implemented to ensure that buyers could afford to pay their mortgage debt even if interest rates were to suddenly increase. However, that left many potential buyers out of the loop as they could not afford these higher interest rates.
Therefore, many people decided to make housing purchases in 2017 to avoid the mortgage stress test. Home purchases declined by 14 percent between December 2017 and January 2018.
Ontario’s Imposition of Foreign Taxes
To deter foreign investors from buying properties and leaving them vacant, Ontario recently passed new laws that restrict foreign homebuyers. Therefore, inflation-adjusted housing prices in the market have remained rather flat since the second quarter of 2017. Now, the Canada housing market is expected to maintain its current status or grow slightly in the upcoming year.
Economic and Social Growth
Millennials in Canada are now reaching the age that they are making more money and thinking about buying homes. This economic and social growth is likely to spur new changes in the Canada housing market. As this large population’s income grows even more, there will likely be more activity in the real estate market. However, millennials are less likely to buy the large, oversized houses of their parents’ generation and are looking more toward smaller condos, apartments, and other more affordable accommodations. It is yet to be seen how this will affect the Canada housing market in the future.
The Canada Mortgage and Housing Corporation (CMHC) has projected that the average housing price for homes in Canada in 2019 will be less than $525,000. However, this figure varies widely according to the specific housing market. Certain cities are expected to have higher housing prices, while others may have significantly lower. For example, Toronto and Vancouver tend to feature higher prices than cities like Quebec as well as more rural areas.
Overall, it looks like the Canada housing market is improving for a wide variety of residents. As millennials start buying their first homes and others seek to sell their properties, it will be interesting to see how the Canada housing market reacts to these trends. One thing is for sure, people will continue to move into the country’s large cities, and housing prices will respond accordingly. Experts will continue to track trends in the Canada housing market in the months to come.