Since 2018, Canada’s housing market has been experiencing a deep freeze, Financial Post reports. This comes after January 2018 when the federal govern25ent imposed a variety of new rules for its citizens who decide to get housing loans, according to Vice. The updated policy requires buyers to pass a stress test which involves showing that new home buyers can pay for their purchases should interest rates spike.
The deep freeze resulted in lower sales this January as compared to 2018’s figures, even when January 2018 numbers show a huge decline. With sales statistics reflecting an even poorer performance, the problem appears to go deeper than previously thought.
Possible government actions
Current homeowners and prospective buyers alike found this development less than favourable, especially as it makes buying and selling properties more inaccessible. That said, Financial Post states that the government have two choices: to retain the rule or to re-examine the new policy and be open to amendments.
Aside from lower sales, housing prices across Canada have also decreased. In fact, it is 5.5% lower as compared to 2018’s prices. With these obstacles preventing prospective buyers from participating in the housing market, mortgage lending is also declining.
Experts predict a drop in the updated earnings report of Canada’s five biggest banks, which will make the problem more apparent. Should this happen, the government can use these figures to rethink the consequences of the new mortgage policies and make possible changes.