Jim Flaherty’s reaction to a cooling real estate market may be the polar opposite of most brokers, with the finance head suggesting he’s “happy” about the slowdown.
“Less demand, lower prices, modestly, in the housing market are much better for Canadians than a boom followed by a bust,” he said early this week. “The housing market has softened somewhat in part because of steps that I’ve taken and I’m happy about that.”
The reaction is to news of a 3.5 per cent annualized drop in the housing sector. Activity across many of the country’s major markets has also seen dramatic year-over-year declines – what Flaherty sees as the kind of controlled slowing needed to overt a more-pronounced and severe correction.
Brokers have been much less enthused about the falloff and the promise of a slower winter season relative to last year’s boom.
The decline in their business is also reflected in the broader economy, with StatsCan reporting growth in the third quarter rose 0.6 per cent – well off of projections and representing the third quarterly decline for 2012.
The mortgage rules revamp in July is largely to blame for that housing retraction, say brokers. They point to the effects a new, lower amortization ceiling for insured mortgages has had on first-time buyers.
Far from blaming those tighter rules, Flaherty is “crediting” them for reining in a sector helping drive Canadian household debt to historic highs.
“I'm all for a soft landing," he said.