OFSI rules won’t stop house price hikes
December 20, 2017
New “stress test” mortgage regulations coming in to effect January 1 may slow housing sales but not price increases in 2018, according to the recent Royal LePage Market Survey Forecast.
The average Canadian home price from 2017 will increase 4.9 per cent by end of 2018 to $661,919, Royal LePage forecast.
The Office of the Superintendent of Financial Institutions (OSFI) mortgage financing stress test targets existing and prospective homeowners applying for a mortgage requiring them to meet stricter criteria when seeking new financing.
“Supply and demand forces will always triumph over regulatory tinkering,” said Phil Soper, president and CEO, Royal LePage. “Attempting to use public policy to steer property prices in huge, rapidly growing cities like Toronto and Vancouver is like a tugboat trying to turn an ocean liner.”
Royal LePage expects the housing market to see lower sales in the first half of 2018 until buyers adjust to the mortgage requirements.
By the end of the year, its survey predicts that Greater Toronto home prices will be up 6.8 per cent, Metro Vancouver and Montreal both up about 5.3 per cent, with even Calgary home prices projected to be 2.3 per cent higher than in 2017.
Edmonton is the only city where Royal LePage expects a price drop, with home prices down 1.5 per cent to an average of $381,180.