“Could (the recent mortgage rules changes) have some impact in areas like Toronto, where affordability is stretched? Absolutely. We could see some moderation in home price appreciation, but I don’t see a market correction in Toronto. I can see one in Vancouver,” Phil Soper, president of Royal LePage, told CREW. “As for the rest of the nation, I don’t see it. It’s not in the economic cards and these changes aren’t enough to put the market into reverse.”
Since the introduction of new mortgage rules, which make it harder for Canadians to qualify for a mortgage, investors and industry players alike have speculated about what impact they will have on various markets.
Initial sentiment was that the larger, pricier markets – Toronto and Vancouver – would bear the brunt of the new rules.
And in Vancouver, especially, the effect of those policies will be compounded by eroding affordability, according to Soper.
"You can see the tax on foreign investment or the new federal regulations haven’t changed things dramatically. But they will, because demand is slacking. Every month for six months demand has softened,” he said. “So it will be difficult to separate the impact of a natural, cyclical cooling of the market from the impact of regulations in Vancouver, but I can tell you that, overall, eroding affordability will still play a much bigger role than a change in regulations.”
Outside those cities, however, Soper predicts market conditions to continue to improve.
“For the rest of the country, most of (markets) I see expanding at a good pace. The economic fundamentals, even in hard-hit Alberta, are improving,” he said. “Peoples’ desire to own property and own homes hasn’t waned and the amount of money that they will be paying in interest has not changed. Money has not gotten more expensive; qualifying has gotten tighter.”
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How will the new mortgage rules impact various markets? One veteran, who has been on the front lines for various market ups and downs, weighs in.