Bank of Canada announces rate

Andy Blatchford
REP

The Bank of Canada stuck with its trend-setting interest rate Wednesday _ but it offered fresh, yet cautious, warnings to Canadians that increases are likely on the way.

The central bank has now left the rate locked at one per cent for two straight policy announcements after the strengthening economy prompted it to raise it twice in the summer.

In announcing the decision, the bank pointed to several recent positives that could support higher rates in the coming months. They included encouraging job and wage growth, sturdy business investment and the resilience of consumer spending despite higher borrowing costs and Canadians’ heavy debt loads.

On top of that, there’s increasing evidence in the economic data that the benefits from government infrastructure investments have begun to work their way through the economy, the bank said.

But on the other hand, the bank noted exports have slipped more than expected in recent months after a powerful start to the year, although it continues to predict trade growth to pick up due to rising foreign demand.

It also said the international outlook continues to face considerable uncertainty mostly because of geopolitical- and trade-related factors.
“While higher interest rates will likely be required over time, (the bank’s) governing council will continue to be cautious,” the bank said in a statement Wednesday that accompanied its decision.

It will be “guided by incoming data in assessing the economy’s sensitivity to interest rates, the evolution of economic capacity and the dynamics of both wage growth and inflation.”

The bank said inflation, a key factor in its rate decisions, has been slightly higher than anticipated and could stay that way in the short term because of temporary factors like stronger gasoline prices. Core inflation, which measures underlying inflation by omitting volatile items like gas, has continued to inch upwards.

Governor Stephen Poloz raised rates in July and September in response to an impressive economic run that began in late 2016. The hikes took back the two rate cuts he introduced in 2015 to help cushion, and stimulate, the economy from the collapse in oil prices.

From here, the bank must assess how to proceed with the interest rate while taking into consideration that Canadian households have amassed high levels of debt and the presence of still-hot housing markets in areas like Toronto and Vancouver.

Last month, the Bank of Canada flagged the steady climb of household debt and these real estate markets as the financial system’s top vulnerabilities.
The bank’s statement Wednesday said recent economic indicators have been in line with its October forecast, which projected a moderation following the country’s exceptional growth in the first half of 2017.

The document contained a few differences compared with the statement that accompanied its last rate announcement in October.

This time, the bank once again noted the unknowns over the future of trade policy, however, it did not specifically mention the ongoing renegotiation of the North American Free Trade Agreement.

Copyright © 2017 Key Media Pty Ltd

Better public transit options, high cost of building such facilities are behind the change, experts say

Evan Duggan
The Vancouver Sun

The amount of parking spaces included in the next wave of downtown Vancouver office tower development is likely to see a sharp reduction compared to the existing inventory, say local commercial property brokers and developers.

Over the next three to four years, there will be about 11 office developments aiming to complete in the downtown core. Nearly all of them will have roughly half the number of parking spaces that buildings were designed with in the 1970s, ’80s and ’90s, according to Ross Moore, a senior vice-president with Cresa.

Ten years ago, virtually every downtown parking garage had a waiting list, said Moore, who published a report on upcoming downtown office projects and their parking inventory in November. 

“Now, as far as I’m aware, there is only one parking garage downtown that has a waiting list,” he told Postmedia in a recent interview.

“There are empty parking garages,” he said “If you’re an owner or developer, you’re looking at that saying, that’s just wasted money. Parking garages are very expensive to construct.”

An office building’s parking inventory is usually measured by spaces per 1,000 square feet of the entire building, he said. 

The most recent office tower to open, The Exchange, at 475 Howe Street, has one stall per 2,000 square feet, according to the report.

Among other planned projects, Morguard’s 25-storey tower at 601 West Hastings; Westbank/Allied REIT’s 24-floor building at 400 West Georgia; and Uptown Property Group’s 28-storey tower at 625 West Hastings would each have one stall per 2,000 sq. ft. as well, according to the report. 

Bosa Developments’ 320 Granville Street tower, which will replace an existing parking garage, will have one space per 3,000 sq. ft.

Moore said older buildings such as Waterfront Centre (1991) has about one spot per 1,000 sq. ft. Park Place (1984) has one spot per 1,100 sq. ft., and Royal Centre (1973) also has one spot per 1,100 sq. ft.

Many companies seeking space these days in the downtown market care more about cycling facilities and transit links than parking, he said. On the other hand, Moore says he has still seen deals killed over a lack of parking.

GWL Realty Advisors (GWLRA) and Healthcare of Ontario Pension Plan are set to replace a parking garage at 753 Seymour with the 33-storey Vancouver Centre II office tower. Due in mid-2021, that building will have one space per 1,600 sq. ft., said Geoff Heu, vice-president of development, Western Canada with GWLRA.

The new tower will include 586 stalls, which is an increase of 47 spaces, but those stalls will now service two towers with more than double the square footage. Heu said the overall square footage of the Vancouver Centre complex will increase from 371,000 sq. ft. to nearly 850,000 sq. ft.

“We’ve gone from about one stall per 800 square feet, to one stall per 1,600 square feet,” he said.

The above-grade portion of the new parkade is designed so it can be converted to office space, in the event the parking demand drops off in the future, he said.

Heu said the original parkade went up before the first office tower, which completed in the early 1970s. “It was all about the automobile then,” he said.

Since then, downtown Vancouver has become much more residential, more walkable and has added three SkyTrain lines. Heu called the opening of the Canada Line in 2010 a game-changer. “We saw a big drop in parking when the Canada Line was built,” he said.

Generally, tenants aren’t as concerned about parking anymore, he said. “There are other ways of getting to work these days.”

In its zoning requirements for non-residential buildings, the city now requires a minimum of one space per 1,560-sq.-ft.

Moore said demand to build parking spaces and to park in them dropped off dramatically in 2011, following the addition of the 21-per-cent TransLink-administered tax on the sale of a parking right. Combined with GST, it pushed the tax on a parking space up to 26 per cent.

“I think there were other things going on,” he said. “The price of gas was going up then. … There was a whole bunch of things coming together, and also the millennials don’t seem to be buying cars like older people.”

Impark, which manages more than 450 public parking lots around the Lower Mainland, agreed.

“2010 was a watershed year for parking for three reasons,” said Impark senior vice-president, Julian Jones. “The Canada Line was one of the reasons. The other one obviously was the Olympics. And at that time, TransLink had a huge push on just trying to get people to not drive downtown during the Olympics and it kind of had a permanent effect.

“You probably saw a 20-per-cent reduction in demand for parking post-Olympics,” he said, noting that demand has stabilized since then, but never rebounded.

He said there could be more dramatic changes to parking coming with the introduction here of ride-sharing, increasing cycling rates and the eventual introduction of driverless cars.

“Then what will parking look like? It probably won’t be the same as it is today,” Jones said.

© 2017 Postmedia Network Inc.

Condos a bright spot in recovering Toronto, Vancouver markets

JULIE GORDON
The Vancouver Sun

The market for condos and attached properties surged in Canada’s main real estate markets, Toronto and Vancouver, as buyer interest in expensive detached homes has withered, data showed on Tuesday.

Toronto home sales and prices were down in November from a year earlier, while in Vancouver sales and prices jumped sharply year-over-year, separate reports showed. Condo prices in both cities held strength compared to cooler segments.

Sales volumes in Toronto rose 3.6 percent in November from October, suggesting the market may be stabilizing after a sharply weaker summer. Sales were down 13.3 percent from a year earlier, the eighth straight month of declining sales after a years-long boom, a report from the Toronto Real Estate Board (TREB) showed.

In Vancouver, sales went the other way, down 7.5 percent from October but up 26.2 percent from a year earlier, the Real Estate Board of Greater Vancouver (REBGV) said.

Together, the two regions account for about half of house sales by volume in Canada.

Vancouver’s market staggered in 2016 after the government introduced a foreign buyers tax, but the less-expensive condo market has bounced back as investors continue to fuel demand. Toronto, hit by a similar tax in 2017, is showing a similar pattern, with detached sales swooning but the condo market showing better strength.

Worries about government moves to cool demand imposed by the province of Ontario in the spring have started to wane, said TREB President Tim Syrianos in the report.

“On top of this, it is also possible that the upcoming changes to mortgage lending guidelines, which come into effect in January, have prompted some households to speed up their home buying decision,” he said.

Canada’s tougher new lending rules that require stress tests on uninsured mortgages and an end to practices designed to circumvent lending limits will take effect on Jan. 1.

The average selling price for all homes types in Toronto was down 2 percent at C$761,757 ($599,903), while condo prices rose 16.4 percent. Overall, prices are 17 percent below the April peak.

The Ontario government introduced a foreign buyers tax and other measures in late April, in a bid to cool real estate demand in Toronto and the surrounding areas.

In Vancouver, the average selling price for condos jumped 19.9 percent, with townhome-style properties rising 18.9 percent compared to the previous year. Detached home prices rose 7.5 percent but are down 4.6 percent from an April 2016 peak.

© 2017 Reuters. All Rights Reserved.

Proponents say proposal would bring more fairness to Vancouver?s real estate market

Dan Fumano
The Vancouver Sun

The idea of a property surtax linked to income taxes was proposed almost two years ago by several local academics as a way to bring more fairness to the famously unaffordable world of Vancouver real estate.

Proponents say the surtax would be good for those who live and work here. The people forced to pay more under the change, they say, would mostly be wealthy foreign owners who purchase Vancouver real estate to stash their money or those who avoid paying Canadian taxes in various ways.

The surtax idea is, as Simon Fraser University assistant professor Josh Gordon wrote in a Vancouver Sun column last month, “so obviously fair,” that since its introduction in January 2016, “not a single serious attempt has been made to criticize it. To do so would be to defend tax avoidance.”

And now, the City of Vancouver also wants to explore the idea.

Vancouver’s 10-year housing strategy, which council approved last week, includes “high-priority” measures the city wants to explore with senior governments “to limit commodification of housing and land for speculation and/or investment purposes.” Possible measures include a flipping tax, and restricting property ownership by non-permanent residents.

The “action plan” also raises the idea supported by dozens of economists over the last two years: the city wants to look at “linking property tax to income taxes paid in B.C.,” the plan says, citing the work of academics from the University of B.C. and SFU.

Vancouver homeowners might balk at the idea of increasing property taxes in an already expensive city.

However, the proposed surtax wouldn’t affect the vast majority of local homeowners or landlords. That’s because the proposal, as first outlined in a January 2016 Sun column by SFU Prof. Rhys Kesselman, would allow taxpayers to credit against the property surtax their B.C. income tax paid in recent years. So almost everyone paying income tax in the province would be exempt.

Property owners most affected by the surtax would include “non-resident foreign owners, astronaut families, tax-evaders and criminals using their proceeds to buy homes,” Kesselman wrote.

Within days of Kesselman’s Sun column, a similar idea was proposed by a group of academics led by economists with UBC’s Sauder School of Business and the Vancouver School of Economics. The two proposals featured different policy details, including how best to protect “house-rich, but cash-poor” retirees, but shared the central idea of a property surtax that can be offset by income tax paid in B.C. (or Canada).

Gordon said this week: “There are several policy variations on this proposal, but the underlying insight is the same: our current tax system incentivizes free-riding. We need to make sure that wealthy people pay their fair share, otherwise we become a subsidized resort town for the world’s rich.”

The fact Vancouver now wants to explore such an approach represents a significant, positive step, Gordon said.

Last week, Vancouver’s chief planner, Gil Kelley, told The Sun that the city can’t fix the unaffordability crisis without taming global demand for local real estate. It would have been hard to imagine such a statement coming from city hall a couple of years ago, Gordon said, at a time when “leadership had somewhat downplayed the role of global capital.”

“But it shouldn’t have been a surprise. This should have been the conclusion all along, this was staring us in the face for years,” Gordon said. “It’s a relief that we’re finally at this conclusion, but in the meantime, a fair bit of damage has been done.”

Gordon referred to a 2014 Canadian government report showing wealthy investor immigrants paid an average annual income tax of $1,400, far lower than other kinds of immigrants or the national average.

That’s a key point when considering the question of fairness, said Tom Davidoff, a Sauder School of Business professor and co-author of the 2016 UBC proposal, pointing out recent research on the phenomenon of low incomes reported in expensive Vancouver neighbourhoods with multimillion-dollar homes.

“If you’re declaring poverty income and you live in a gazillion-dollar house, I think as a matter of basic fairness and efficiency, you ought to be footing a lot of the tax bill,” Davidoff said.

Davidoff stresses that even for homes hit with the 1.5-per-cent, annual surcharge he’s suggested, the total property-tax rate wouldn’t be especially high by global standards.

But Vancouver’s current combination of low property-tax rates and high income taxes, Davidoff said, is “just rolling out the red carpet for unaffordability.”

“We have this big tax giveaway to people who want to invest here and not make a living here,” he said. “It’s a real problem.” 

The UBC proposal forecasts revenue of $90 million per year in Vancouver alone, which they described as a “conservative estimate.”

Kesselman said the idea he proposed last January was “probably too left-of-centre for a B.C. Liberal government.” But the current alignment of governments suggest there’s a chance it could see the light of day. 

B.C. Finance Minister Carole James didn’t answer a question this week about the viability of a property surtax, but in an emailed statement said she and Housing Minister Selina Robinson are working, ahead of the 2018 budget, on a housing strategy “that can improve affordability for British Columbians, reduce speculation and ensure fairness.”

And the B.C. NDP publicly supported the surtax approach last year while in opposition.

Kesselman’s proposed approach doesn’t differentiate based on nationality or immigration status — only where income taxes have been paid.

Asked this week whether anyone criticized the proposal as xenophobic, Kesselman answered with a question: “Is it xenophobic to want to protect housing for people who live somewhere, make their living there, contribute there?

“I would hope we’re beyond the point where that’s going to freeze us in our ability to deal with some of these issues,” he said. “I guess it’s in the eye of the beholder whether or not that’s xenophobic, but I don’t think it is.”

© 2017 Postmedia Network Inc.

Vancouver sales up 26.2% last month

Steve Randall
Canadian Real Estate Wealth

There was a jump in home sales in greater Vancouver in November, up 26.2% year-over-year.

Greater Vancouver Real Estate Board reported that the 2,214 sales eased 7.5% from October but were 17% above the 10-year November average.

“We’re seeing steady demand in today’s market. Home buyer activity is operating above our long-term averages, particularly in our townhome and condominium markets,” Jill Oudil, REBGV president said.

There was a 31.8% rise in detached home sales (841) year-over-year while apartment sales gained 25.7% (1,508).

Meanwhile new listings in Metro Vancouver were down 9.5% from October to 4,109 but up 30.6% from a year earlier.

Despite the rise in listings from last year, active inventory gained just 4.3% to 8,747 year-over-year and was down by that percentage from October 2017.

“While we’re seeing more listings enter the market today than we saw at this time last year, we have a long way to go before our home listing inventory rises back to more historically typical levels,” Oudil said.

The benchmark price of all properties gained 14% year-over-year and 0.4% month-over-month to $1,046,900.

This was driven by a 23.9% rise in the benchmark apartment price ($684,200) year-over-year while detached homes gained 6.1% to $1,608,000.

Copyright © 2017 Key Media Pty Ltd

Slight drop in average sale price compared with last year due to fewer detached homes being sold

other

The Toronto Real Estate Board says demand for home ownership in the Greater Toronto Area bucked a seasonal trend in November with 7,374 homes being sold.

That represents a slight increase of 256 sales over the previous month, but a drop of 13.3 per cent from November 2016.

The board says the average sales price in the GTA for all home types last month was $761,757, down by two per cent compared to November 2016, due in large part to a smaller share of detached home sales versus last year.

High density home types continued to lead the way in terms of price growth, with the average condo price rising 16.4 per cent to $516,965 compared to November 2016.

The average price of a detached home was down 5.8 per cent at $996,527 while the average prices for semi-detached homes and townhouses were up 1.2 per cent and 4.8 per cent respectively.

Board president Tim Syrianos says several factors may be responsible for the year-over-year decrease in overall sales.

“Similar to the Greater Vancouver experience, the impact of the Ontario Fair Housing Plan and particularly the foreign buyer tax may be starting to wane,” said Syrianos in a statement.

“On top of this, it is also possible that the upcoming changes to mortgage lending guidelines, which come into effect in January, have prompted some households to speed up their home buying decision.”

New lending guidelines coming

In January, the Office of the Superintendent of Financial Institutions will implement new lending guidelines that will require borrowers who do not require mortgage insurance to show they would still be able to make their payments if interest rates were to rise.

In addition, the Bank of Canada has raised interest rates twice in recent months to the current overnight rate of one per cent, signalling a clampdown on cheap borrowing and driving the big bank prime rates and the cost of variable-rate mortgages higher. The cost of new fixed-rate mortgages have also risen as yields on the bond market have also risen.

The board says new listings entered into its MLS system in November amounted to 14,349 — up 37.2 per cent compared to the same period last year when the supply of listings was very low.

“We are still seeing seller’s market conditions for townhouses and condominium apartments in many neighbourhoods versus more balanced market conditions for detached and semi-detached houses,” said Jason Mercer, the board’s director of market analysis.

©2017 CBC/Radio-Canada

Amacon?s Juneau to take its place in amenity-rich Brentwood neighbourhood

Simon Briault
The Vancouver Sun

Juneau

Project location: 4465 Juneau St., Burnaby

Project size: 147 homes with one to three bedrooms, ranging in size from 515 to 1,979 square feet and priced from the mid-$500,000 range

Developer: Amacon

Architect: IBI Group

Interior designer: False Creek Design Group

Sales centre: 2287 Willingdon Ave., Burnaby; opening this month

Telephone: 604-299-9191

Website: juneaubyamacon.com

The Brentwood area in North Burnaby has a lot going for it. There is a multitude of shops, amenities and services in and around Brentwood Town Centre, rapid SkyTrain transit and a growing number of multi-family residential buildings, which provide for more affordable living relative to what one might find in downtown Vancouver.

Juneau, a new offering in Brentwood from developer Amacon, is a residential tower of 147 homes with one to three bedrooms at Juneau Street and Willingdon Avenue.

Amacon has roots going back some 50 years in Vancouver, starting out as a family-based landscaping firm. Since that time, it has grown into a company that has built homes in Vancouver, Burnaby, Port Coquitlam, Edmonton and Mississauga, Ont. Grace Austin, Amacon’s manager of marketing and sales, has a personal connection to Brentwood and remembers it fondly.

“I actually grew up in North Burnaby and I was born at Burnaby General Hospital,” she said. “I remember the original Brentwood mall from the ’70s, and it was basically just one strip of stores in a covered shopping centre. With the rezoning of Brentwood Town Centre in more recent years, we’ve seen a complete transformation. There’s been a flood of new amenities coming to this area. It’s like night and day looking at it now compared to what it was like when I was a kid.”

At 23 storeys, Juneau will not be as tall than other highrises in the area, and has something of a  boutique feel in its design by architects at IBI Group. The zoning in the area is designed to have the line of residential towers gradually slope down towards the SkyTrain.

The location will position the development as a gateway to Brentwood Town Centre for people arriving from Highway 1. The building is terraced up from south to north so that it blends in seamlessly with its surroundings. Juneau includes five townhouses arranged round a protected courtyard and there will be a public art installation on the southeast corner of the property.

“People really appreciate that there are no bridges in Burnaby to get to Vancouver, Coquitlam and other surrounding areas,” Austin said. “It’s really centrally located. If you took a picture of the Lower Mainland and put a dot right in the middle, Burnaby is right there at the centre of it all. It’s really accessible and after the Millennium Line went in a few years ago, you can get to downtown Vancouver in less than 20 minutes. Simon Fraser University and BCIT are also super close, as well.”

Austin said there’s been a surge in demand for homes in the neighbourhood and Amacon is pulling in buyers with luxury finishes, air conditioning, nine-foot-high ceilings, front-loading washers and dryers and a choice of Ecru or Walnut colour palettes.

The kitchens at Juneau will include appliance packages featuring 36-inch french door integrated fridge/freezers, (24-inch in the one-bedroom homes), 30-inch convection wall ovens, five-burner gas cooktops and slide-out hood fans. They also come with microwaves, multi-cycle integrated dishwashers, full-height flat-panel cabinetry and polished stone, waterfall-style countertops. The doors and draws are soft-close, there are single-basin undermounted sinks and chrome faucets with pull-down sprays.

Bathrooms feature polished stone countertops, porcelain sinks and polished chrome lavatory faucets. Ensuite bathrooms have frameless glass walk-in showers with rain heads and handheld wands. There are deep soaker bathtubs and the walls and floors are lined with 12-by-24-inch oversized porcelain tiles. There are framed, mirrored medicine cabinets with extended ledges.

Juneau includes a concierge service and a social lounge with landscaped outdoor private courtyard. There’s also an Amacon “Think Lab” — a collaborative co-working space for residents – in addition to a fully equipped fitness lounge with a yoga studio and a games room to entertain family and friends. Other on-site amenities include an electric car-share program, a bike repair studio and two car-wash stalls.

 “Coming from that area originally, I may be a little bit biased, but it’s a really beautiful place, with Burnaby Lake Park not that far away as well,” Austin added. “Brentwood will definitely see a lot of growth and change over the next little while, but with that will come even more amenities and services – things that the single strip mall in the ’70s certainly didn’t offer.”

The map for Juneau’s sales brochure features no fewer than 14 restaurants and cafes in the immediate area, including JOEY Burnaby, White Spot, Cactus Club Café, Earls Kitchen + Bar, Starbucks, Steamworks Brewery & Taproom, Kita Sushi and Creme de la Crumb bake shop. Recreation and health options come in the form of Steve Nash Fitness World & Sports Club, Oxygen Yoga & Fitness, Gold’s Gym, Dance Express and Kensington Pitch & Putt.

The sales centre at 2287 Willingdon Avenue features a two-bedroom show home fitted by False Creek Design Group in a mid-century modern style, using Juneau’s architecture as a cue. Completion is expected for the fall of 2019 and prices start in the mid-$500,000 range.

© 2017 Postmedia Network Inc.

Neil Sharma
REP

A new REMAX survey revealed most Canadians are in the dark about the looming mortgage lending rules, but that doesn’t mean they have to be left behind when they’re ready to buy.

Christopher Alexander, regional director at REMAX Integra, says advising clients about their options will be paramount to helping people find homes in the coming years. While the survey results revealed that many Canadians haven’t kept abreast of the latest regulatory changes, Alexander says sales agents, brokers and other real estate professionals are the conduits through which information travels.

“It’s important to stay informed and make sure (sales agents) have all the information that the consumer they’re working with might need,” he told REP. “Our agents are so productive that they know what’s going on in the market from day-to-day and they know things can change in an instant. If consumers work with professionals who transact consistently, they’ll be well guided.”

The Bank of Canada recently announced that under the new lending rules, 10% of Canadians will be disqualified from mortgage qualification—a number that reaches 12% in Toronto and Vancouver.

REMAX’s survey results reveal 37% of Canadians aren’t aware of the regulatory changes. However, of the 58% who are, 27% don’t believe they’ll be impacted, while 18% do; and the remaining 13% are unsure of whether or not they’ll be affected.

Forty-eight percent of respondents plan on buying a house within the next five years, and Alexander says it’s important to ensure consumers don’t have misguided expectations about what they can afford. Fortunately, he added that, for those unable to qualify for their desired abodes, there are solutions.

“I’d tell them they should be looking to more affordable neighbourhood and cities,” he said. “If they can’t get approved in Toronto, look in Mississauga or Oakville, and continue to save as much money as they can because the bigger the down payment they have, the more flexible their mortgages will be. Or turn to an alternative lender if they really absolutely need to buy, because private lenders are giving people mortgages at the real rates, not the stress test ones.”

In spite of the Bank of Canada’s prediction, Alexander doesn’t anticipate too many people will be prohibited from entering the housing market. People can get creative by opting for longer amortization periods, for example.

“It could be a rude awakening if they have no pulse of what’s going on in marketplace, but younger homebuyers are getting creative,” he said. “They’re going elsewhere and looking at commuting, and going to where they can buy a house.”

Copyright © 2017 Key Media Pty Ltd

Ephraim Vecina
Canadian Real Estate Wealth

The British Columbia Real Estate Association predicted continued cooling of the provincial housing market in 2018, but it cautioned would-be home buyers that prices likely won’t soften.

The association has released its 2017 Fourth Quarter Housing Forecast showing an expected 8.8% decrease in residential sales across the province this year and a further 10.4% decline next year.

BCREA estimated home sales in 2018 to dip to 91,700 units, down more than 10,000 from the record set in 2016, but still well ahead of B.C.’s ten-year sales average.

BCREA chief economist Cameron Muir said that the supply of homes for sale is at or near its lowest point in decades, and the imbalance between supply and demand has been largely responsible for rapidly rising house prices.

The average price of a home in B.C. is forecast to increase 3.1% to $712,300 this year, and a further 4.6% to $745,300 in 2018.

Muir noted that higher interest rates and more stringent mortgage qualification rules “will reduce household purchasing power and erode housing affordability.”

The association further warned that interest rates are expected to rise in the next year and new mortgage qualification rules will carve into purchasing power.

“Given the rapid rise in home prices over the past few years, the effect of these factors will likely be magnified,” Muir said, as quoted by The Canadian Press.

But he also pointed to a potential for more balanced market conditions, as weakened consumer demand and a surge in new home completions next year is expected to curb upward pressure on home prices.

Copyright © 2017 Key Media Pty Ltd