In his independent study, Will Dunning stated that home sales will get hit hard by the stricter regulations that would reduce the total value of mortgages that consumers would be able to qualify for—a trend that will eventually lead to less home construction and more constrained supply in a city where the rental vacancy rate is less than 1 per cent.
“Fewer tenants will be able to move out of rentals and into home ownership,” Dunning wrote in his report, as quoted by HuffPost Business Canada
Vancouver home prices have reached their historically highest levels in 2016, with monthly rental rates breaking all previous records.
Rental site PadMapper stated in its latest report that as of October, the average rental cost for one-bedroom units in the city rose by 2.9 per cent (up to $1,800), and prices for two-bedroom homes increased by 4.5 per cent (up to $2,800).
The same report noted that 17 of the 25 Canadian cities surveyed exhibited major growth in rental prices, with the largest spikes observed in Vancouver, Toronto, Victoria, and Montreal.
Announced by Finance Minister Bill Morneau, the preventive measures were meant to mitigate the housing industry risks faced by both consumers and market players. Among the steps are the closing of tax loopholes for capital gains exemptions on principal residence sales, the standardization of lending criteria (including a tighter “stress test”), and the adoption of a new risk-sharing model for lenders.
Mortgage changes to impact investors
New housing measures announced
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Tenants in Vancouver should brace themselves for higher rental costs in the next few months amid new mortgage rules that took effect on October 17, according to the chief economist of Mortgage Professionals Canada.