Home sales in the metro Montreal market fell 18 percent during the first quarter compared to a year ago, the latest evidence that new mortgage rules introduced by Canadian regulators last summer have cooled markets there.
A database maintained by the Quebec Federation of Real Estate Boards showed its third consecutive quarterly decrease in sales in the Montreal area, the group said today.
The number of properties for sale across Quebec was up 7 percent from a year ago, to 70,239 the 12th consecutive quarterly increase.
“The increase in supply and the decrease in sales resulted in an easing of market conditions in most urban centers, which translated into smaller price increases and longer average selling times,” said Paul Cardinal, manager of QFRED’s market analysis department.
At $225,000 (Canadian), the median price of single-family homes across Quebec was up just $1,000 from a year ago.
The Canadian Real Estate Association (CREA) recently reported that home sales across Canada fell a seasonally adjusted 2.1 percent from January to February, and were down 15.8 percent from the same time a year ago.
The slowdown in demand has been accompanied by a slowdown in new listings, which has “kept the housing market in balanced territory and held the overall number of homes for sale in check,” CREA said
The number of newly listed homes was down 1.2 per cent from January to February, to the lowest level since November 2010.
Across Canada, the months’ supply of inventory stood at 6.8 months at the end of February, up from 6.6 months in January. At $368,895, the non-seasonally adjusted national average price for homes sold in February was down 1 percent from a year ago. CREA is expected to report numbers for March on Monday.
Fearing a potential housing market bubble and rising household debt levels, Canada’s Department of Finance Canada in July instituted several changes to the rules governing government-backed insured mortgages.
The amortization period for a mortgage loan was reduced to 25 years from 30; maximum refinancing amounts are now 80 percent of loan-to-value; a borrower’s gross debt service ratio and total debt service ratio were limited to 39 percent and 44 percent; and the availability of government-backed insured mortgages are limited to homes with a purchase of price of less than $1 million.
When Inman News columnist Steve Bergsman spoke to CEOs at two major Canadian brokerages last year about the changes, they had different perspectives.
“The government introduced the change to be a clear drag on activity. I call it kicking a guy when he’s down. It was unneeded and ill-timed,” Phil Soper, president and CEO of Royal LePage, said at the time.
Ross McCredie, president and CEO of Sotheby’s International Realty Canada, sympathized with the move, saying officials were attempting to address potential overheating of the Toronto market.
“We like to see stable, healthy markets without major jumps or people leveraging too much debt,” McCredie said in expressing his support for the move to tighten mortgage lending. “What the ministers are really trying to address, their biggest concern, is Toronto, where there are 130 condo projects under construction right now. About 60 percent of the entire Canadian marketplace in terms of volume of sales is in Toronto.”