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Government of Canada Takes Action to Maintain a Healthy, Competitive and Stable Housing Market Government of Canada Takes Action to Maintain a Healthy, Competitive and Stable Housing Market

By Christopher Kutyn /

December 11, 2015 – Ottawa, Ontario – Department of Finance

Finance Minister Bill Morneau today announced changes to the rules for government-backed mortgage insurance to contain risks in the housing market, reduce taxpayer exposure and support long-term stability. Effective February 15, 2016, the minimum down payment for new insured mortgages will increase from 5 per cent to 10 per cent for the portion of the house price above $500,000. The 5 per cent minimum down payment for properties up to $500,000 remains unchanged.

Today’s announcement represents a graduated approach to increasing the down payment requirement proportionally to the cost of a home. Canadians who already hold mortgages will not be affected by this announcement.

The Government continuously monitors the housing market and is committed to implementing policy measures that maintain a healthy, competitive and stable housing market. Higher homeowner equity plays a key role in maintaining a stable and secure housing market.

In making this announcement, Minister Morneau also highlighted the increases in guarantee fees for Canada Mortgage and Housing Corporation (CMHC)-sponsored securitization programs, announced today by CMHC. The Office of the Superintendent of Financial Institutions has also announced today its plans to update regulatory capital requirements for residential mortgages to ensure that capital requirements keep pace with market developments and risks. Taken together, today’s actions will strengthen the resiliency of Canada’s housing finance system to promote long-term stability and balanced economic growth.

Quote
“The Government’s role in housing is to set and maintain a framework that is equitable, stable and sustainable. The actions taken today prudently address emerging vulnerabilities in certain housing markets, while not overburdening other regions. They also rebalance government support for the housing sector to promote long-term stability and balanced economic growth.”

“This measure will increase homeowner equity, which plays a key role in maintaining a stable and secure housing market and economy over the long term. It also protects all homeowners, including many middle class Canadians whose greatest investment is in their homes.”

– Bill Morneau, Minister of Finance



Market Upswing BC Wide

By Christopher Kutyn /

The BC real estate market is even more robust than anticipated, according to the  The British Columbia Real Estate Association (BCREA) 2014 Third Quarter Housing Forecast Update.

“Stronger than expected consumer demand in the third quarter triggered an upward revision in the housing forecast,” said Cameron Muir, BCREA Chief Economist. “Rising consumer demand is now broad-based across the province, with some of the largest year-over-year gains occurring in the Okanagan and the Kootenay regions.”

All signs point upward: The forecast from BCREA is that MLS®  residential sales will rise  9.8 per cent to 80,100 units this year, followed by another 4 per cent to 83,300 units in 2015.   The 15-year average is 80,400 unit sales and a record 106,300 MLS® residential sales were recorded in 2005.

It’s not just sales volume on the rise, though.  Prices appear to be increasing too.  The average MLS® residential price for the province is forecast to increase 5.6 per cent to a record $567,300 this year and a further 1.4 per cent to $575,400 in 2015. “Since the housing stock is generally expanding at the same pace as population and household growth, rapid escalation of home prices is not expected over the next two years,” added Muir. BC housing starts are forecast to edge up 2 per cent to 27,600 units this year and a further 1.8 per cent to 28,100 units in 2015.

You can get the information on local real estate values and trends on this site and through our Market Minute.  If you have any specific questions,email us at chris@kutyn.com and we will do our best to help.

 


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