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Two provinces will account for lion's share of 2019 sales decline

Ontario and British Columbia will account for the lion’s share of the decline. According to Ben Myers, president of Bullpen Research & Consulting Inc., many residents in the Toronto area, specifically, are choosing to rent longer because they cannot afford the homes they would like to buy.

“The biggest factor is B-20, the new stress test, by OSFI,” he said. “It’s reducing credit availability in the market and people can’t afford the home they wanted, so people are choosing to rent longer to afford the home they want instead of the home they don’t want, that they’d sell three to four years down the road.”

In B.C., the provincial government has implemented several pieces of legislation designed to cool the market, and according to Robert Mogensen, a broker with The Mortgage Advantage, it’s done just that. The OSFI-mandated B-20 has also quelled demand, he added.

“I’d attribute it to a combination of three things,” said Mogensen. "The new mortgage stress test rules, which have had a huge impact on buyers at all levels, whether they’re first-time or people moving up the chain; secondly, rising interest rates have compounded that new set of rules; thirdly, it seems the Chinese have lost their appetite for rapidly buying properties in Vancouver to some degree due to the new empty condo tax. We don’t see condos being sold to Chinese investors the way they have for the last several years. All of those things together have contributed to the depressed market.

The Latest in Mortgage News - 2019 Forecasts - Mortgage Rates & Mortgage Broker News in Canada

The Canadian Real Estate Association is forecasting national home sales to post double-digit declines in 2019, falling to the lowest level in five years.

Despite supportive population growth, the association says much of the headwinds are the result of government policy designed to throw cold water on the housing market.

“While economic and demographic fundamentals remain supportive for housing demand in many parts of the country, policy headwinds together with rising interest rates are limiting access to mortgage financing and negatively impacting homebuyer sentiment,” CREA said in its 2019 forecast.

“At the same time, growth in home prices has slowed sharply in some regions. Indeed, home prices are declining in parts of the country where the supply of homes available for purchase is elevated relative to sales,” it added.