Canadian home sales drop after new mortgage rules brought in

VANCOUVER (NEWS1130) – Home sales across the country have dropped since the introduction of new mortgage rules in July. The Conference Board of Canada is reporting the numbers are down in 21 of 28 regions across the country.

In July, the maximum term for a mortgage was reduced from 30 years to 25 years. At the same time, the maximum amount of that mortgage was reduced from 85 per cent of the value of the property down to 80 per cent.

“So, that has reduced the pool of potential buyers in the market, and therefore, a certain amount of demand for houses,” says Robin Wiebe with the Conference Board.

In Vancouver, home sales dropped more than nine per cent in August compared to July, while the number of new listings in that market dropped more than 1.5 per cent during the same time period.

Year-to-year, sales are down nearly 25 per cent in Vancouver in August, while the number of new listings has dipped nearly 8.5 per cent.

The average price for a home in Vancouver in August actually gained three per cent ($715,593), but Wiebe says that statistic has been volatile and home values are expected to decline. Home values are down nearly nine per cent in Vancouver in August compared to the same month last year.

Wiebe says while he expects “a few more months of price softness” in the Vancouver real estate market, he is not expecting major declines because “ultimately, Vancouver’s economy is decent. Employment is rising, interest rates are low and the population is growing relatively quickly.”

The story is very similar in the Fraser Valley with double-digit declines in home sales for the month (12.3 per cent) and the year (14.8 per cent). The number of new listings dropped one per cent compared to July, and 6.1 per cent compared to the previous August.

The average home price in the Fraser Valley in August was $470,774, down 1.2 per cent from the previous month and five per cent from last August.