“Less demand, lower prices, modestly, in the housing market are much better for Canadians than a boom followed by a bust,” he said early this week. “The housing market has softened somewhat in part because of steps that I’ve taken and I’m happy about that.”
The reaction comes to a 3.5 per cent annualized drop in the housing sector. Activity across many of the country’s major markets has also seen dramatic year-over-year falls – what Flaherty sees as the kind of controlled slowing needed to overt a more pronounced and severe correction.
For property investors, the slowdown has meant increased demand for rental units as first-time buyers find themselves shut out of the market.
The mortgage-rules revamp in July is largely to blame for that housing retraction, say mortgage brokers, they point to the effects a new, lower amortization ceiling for insured mortgages has had on first-time buyers.
The decline also reflects that for the broader economy, with StatsCan reporting growth in the third quarter rose 0.6 per cent – well off of projections and representing the third quarterly decline for 2012.
Far from blaming those tighter rules, Flaherty is “crediting” them for reining in a sector helping drive Canadian household debt to historic highs.
“I'm all for a soft landing," he said.