BC Business
Construction near False Creek, Vancouver
The federal government’s decision to tighten mortgage rules has resulted in a slowdown in new housing starts and resales, threatening to stymie growth and cut jobs, claims a report from the Canadian Association of Accredited Mortgage Professionals (CAAMP).
The report gives dire assessment for Vancouver’s market in 2014-2015, which could lose up of 7,500 construction-related jobs and see a 30 per cent drop in housing starts from 2011. Housing starts were down six per cent from March to April in Metro Vancouver, according to the Canada Mortgage and Housing Corporation.
The report claims that mortgage rules instated last summer by Finance Minister JIm Flaherty, which shortened the amortization period on insured mortgages from 30 to 25 years, will further hamper market activity.
The government brought in the new rules in order to cool down what many saw as Canada’s overheated housing market, and lessen the risk of a U.S.-style meltdown. There is consensus that the new rules have had an effect on Vancouver’s housing market, but disagreement over how much.
Vancouver’s housing market was already in a state of transition prior to the government’s policy change last summer, says the report. Vancouver’s sales-to-listings ratio is Canada’s worst, and the report predicts that it will fall further. The report expects new apartment construction to also fall to 6,600 to 7,200 new units at an annual rate. Apartment starts averaged at 11,800 units during 2011 and 2012.
“Construction of new housing is an important creator of jobs, not just in the construction industry, but also in industries that supply goods and services to the construction process,” notes CAAMP Chief economist Will Dunning in the report. The report points to non-construction sectors that could be affected by slowdown such as sales, financing, legal services, moving, renovations and repairs, sales of furniture and appliances and landscaping.
CAAMP represents mortgage brokers which, according to the Wall Street Journal, depend on a robust housing market in order to make a living.