The online poll, conducted this week and after the implementation of more-stringent rules, asked investors whether they'll have a direct and negative impact on property values in the hot T.O. condo market. Some 55% answered yes and 45% said no, those changes won't erode prices.
Finance Minister Jim Flaherty has been open about the fact that Toronto’s real estate market, where average house prices have risen more than 30% in five years to $516,787, drove the decision to tighten mortgage rules.
There are more skyscrapers under construction in Toronto than any other city in North America.
“This concerns me because it’s distorting the market, quite frankly,” Flaherty said. “And for that reason we’re taking the steps that we have today.”
With just 5% of buyers affected, there was unlikely to be a significant long term affect, says Tarik Gidamy, co-founder of TheRedPin.com. However, there could be short-term effects as those with household incomes of $75,000 find they now qualify for $50,000 less in financing.
There is likely to be a short-term effect on the upper end of the market, as $1 million homes no longer qualify for Canadian Mortgage and Housing Corporation (CMHC) coverage, he says.
“Like any major change, I think we’ll see some effect in the short term but in time people acclimatize,” Gidamy says. “I don’t see it leading to a drop, unless inventory doesn’t sell in some markets. Then we could see prices being lowered.”
Other analysts point to the high demand in Toronto, saying buyers are unlikely to see a big improvement in affordability because in many areas there was still a limited supply of properties.
Tridel SVP of sales and marketing Jim Ritchie says the majority of homebuyers in Toronto won’t be affected because the tightened restriction will not apply to them. The changes were unlikely to affect affordability in the city, he said.
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