The Toronto Real Estate Board is calling on Ottawa to re-think the mortgage stress test and bring back longer mortgages amid falling sales in the country’s biggest real estate market.
Sales fell 2.4 per cent on a year-over-year-basis. They were also down compared to the previous month.
“The OSFI mandated mortgage stress test has left some buyers on the sidelines who have struggled to qualify for the type of home they want to buy. The stress test should be reviewed and consideration should be given to bringing back 30-year amortizations for federally insured mortgages,” said Gurcharan (Garry) Bhaura, TREB president, in a statement.
“There is a federal budget and election on the horizon. It will be interesting to see what policy measures are announced to help with home ownership affordability.”
New listings fell more than sales. Tighter market conditions will likely lead to further price appreciation.
Despite fallings sales — the average selling price for all types of homes was up 1.6 per cent year-over-year, driven by condos and high-density low-rise homes.
Jason Mercer, TREB’s Director of Market Analysis and Service Channels, says home sales have a substantial impact on the Canadian economy.
“A study conducted by Altus for TREB found that, on average, each home sale reported through TREB resulted in $68,000 in spin-off expenditures accruing to the economy,” said Mercer, in a statement.
“With sales substantially lower than the 2016 record peak over the last two years, we have experienced a hit to the economy in the billions of dollars, in the GTA alone. This hit has also translated into lower government revenues and, if sustained, could impact the employment picture as well.”
TREB is also calling on the provincial Ford government to help renters struggling to find a place to live in a tight market.
“With vacancy rates hovering in the one per cent range and average rents increasing in the high single digits, it is clear that signing a lease for a rental unit is not an easy proposition in the GTA,” said John DiMichele, TREB CEO, in a statement.
“While some rent control provisions have been relaxed by the new provincial government, policy makers need to look at further initiatives to encourage rather than discourage investment in rental apartments.”
Compared to last year — the average rent for a one-bedroom unit was up 8.1 per cent to $2,145 and up 7.4per cent to $2,810 for two-bedrooms.