The Canadian housing market is expected to moderate in 2018 with the effect of the tightened mortgage rules which come into force next week, combined with rising interest rates.
A poll of analysts conducted by Reuters calls for a significant cooling of prices as several years of cheap borrowing and easier credit underwriting ends.
Nationwide prices are expected to grow by 1.9%, a modest figure given the 8.5% rise forecast for 2017. Prices will increase 2.6% in 2019, the analysts believe.
Michael Dolega, senior TD Bank
says that the tightened mortgage rules will have an impact especially in the highest priced markets such as Toronto and Vancouver.
However, the large number of credit unions in BC, which are not subject to the tighter rules, should dilute the impact in the province.
The hot markets are still expected to out-perform the national average with Toronto set for a 2% rise in prices for 2018 and 3% in 2019. Vancouver could see 6% in 2018 before easing to 4.6% in 2019.
The gains for Vancouver suggest that more policy interventions are needed in this market according to Laurentian Bank chief economist Sebastien Lavoie.
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