BC Business
Plus, how Canadian homebuyers are rushing to beat new mortgage restrictions, what's fuelling China's property bubble, and why more people are renting than buying homes in the U.K.
CMHC supports the new Canadian housing rules that come into effect Monday, which it helped the Department of Finance develop. “While some critics now accuse us of overlooking the unintended consequences’ of our actions,” says CMHC president and CEO Evan Siddall, “in fact, the results of these policy changes were fully intended.” Government should not be supporting lending that threatens our economic stability, he says, and tighter lending standards will limit price increases, ultimately making houses more affordable. (The Globe and Mail)
Canadian mortgage brokers see a flurry of borrowers before new federal mortgage rules that take effect Monday. Gregory Klump, chief economist of the Canadian Real Estate Association, says the changes will have the biggest effect on markets where there is a shortage of supply, particularly in the lower price range. In more balanced markets, people whose purchasing power is reduced can simply buy cheaper homes, he says, but in Toronto and Vancouver, there may not be any homes available at a lower price point, leaving those potential buyers priced out of the market. (CTV)
The growing use of mortgages could make China’s latest property boom particularly unstable. Last month, economists at the Bank of China warned in a report that worsening asset price bubbles were adding to a potentially troublesome frothy market. In the last few weeks, local authorities have accelerated efforts to tighten housing markets in up to 20 Chinese cities, but in many cases these steps have only added to the rush, as home buyers move in while they can. (The New York Times)
When a bubble is not a bubble. A severe imbalance in land supply is fuelling China’s wild property market, which is a political problem as much as an economic one. Big cities, where people actually want to live and work, are sitting on large land banks but releasing only small plots. Governments in big cities count on incremental land sales as a source of revenue; governments in small cities hope the restrictions will eventually send people their way. (The Economist)
U.K. property rentals will outstrip house sales for the first time in eight decades next year as homebuyers struggle to find properties they can afford. Homeownership levels had fallen to their lowest levels in 30 years at the start of 2016, and although recent figures from mortgage lenders showed a pickup in the number of loans taken out for house purchases, the number of homes for sale remains near a record low and prices are rising. (The Guardian)