Canadian home prices weakened in September as a change in mortgage rules introduced in the summer appeared to keep some buyers out of the market. The Teranet House Price Index shows that home prices fell 0.4 per cent in September from the previous month.
The drop was spread across six of the 11 Canadian cities in the study, with Victoria facing the steepest decline of 1.3 per cent. Prices fell in Vancouver, down 1.2 per cent, and Ottawa, down 0.8 per cent. n the upside was Toronto, rising 0.1 per cent, while both Calgary and Halifax rose 0.5 per cent.
Hamilton increased 0.3 per cent in September from August. The report offered further evidence of the summertime slowdown of the domestic economy, as well as the impact of mortgage regulations that were introduced by Finance Minister Jim Flaherty in June.
Under the new rules, the maximum amortization period for government-insured mortgages would be reduced to 25 years from 30 years. These changes undoubtedly contributed to cool the market. The changes that were enforced on the Canadian real estate mortgage policies in June this year have chilled down the housing market in major cities of Canada.
The decision of the federal government to reduce the amortization period on government insured homes from 30 years to 25 years has taken a toll on the demand of the entire housing market, specifically the high-end luxury homes. Many families are now unable to meet the stricter mortgage requirements and either delay buying a house or get unsecured credit from other sources for high interest rates damaging their credit score, as a result.
The new mortgage rules have slowed down the high-end luxury real estate market because of which construction of such homes has also decreased. The cooling real estate market of Canada is therefore, having an overall cooling affect on the economy and the people. Mark Carney, the Governor at the Bank of Canada, believes that the implementation of new rules will tame the mortgage market in Canada and also provide long-term financial stability as well as security against various economic risks.
TORONTO HOME PRICES
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