15 March 2018

“Such a decline of activity after record high sales at the end of 2017 proves that many buyers rushed into the market in order to make a purchase before the stricter rules took effect in January,” – noted Gregory Klump, CREA’s chief economist.

As you know, starting January 1, even borrowers with more than 20% down payment have to undergo a new stress test.

If they want to qualify for a federally regulated mortgage, they must prove their ability to withstand an interest rate either 2% higher than the contract one or the central bank’s five-year benchmark rate (the higher one).

The sales activity was also negatively affected by the Bank of Canada’s decision to raise its interest rate to 1.25%, making it the third quarter increase since the previous summer. In January, real estate sales in Canada were down by 14.5% from December, says CREA.

Last month, the average housing price was slightly higher than $494,000, which is 5% lower than a year ago. However, if we exclude the most expensive markets (Vancouver and Toronto), we’ll get the average price below $382,000 and a 3.3% hike in case of annual comparison.