Finance Minister Jim Flaherty says he’s happy increases in home prices have started to slow, but is relatively mute on a much bigger concern for brokers – the falling number of sales.
“I don’t mind prices coming down a bit,” he said in an interview with The Globe and Mail Tuesday. “I am actually pleased, because we needed to take some of the steam out of the rapid increases in prices in the residential housing market, particularly the condominium market.”
According to new CREA numbers released Tuesday, 20,538 homes sold over the Multiple Listing Service in December -- down 17.4 per cent from a year ago. That amounts to the biggest year-over-year drop since July, when tighter mortgage rules took effect.
The sales slump represents a different and more urgent story than the 0.5 per cent drop in national home prices from November to December, say brokers. Actually, on a year-over-year basis, the national average price rose 1.6 per cent last month.
That softening in home prices is good for the health of both the market and the Canadian economy, says Flaherty. But brokers continue to direct Ottawa’s attention to the slowdown in sales and the very real impact that has on GDP growth and, ultimately, prices.
As recently as last month, CAAMP officials reiterated those concerns in talks on Parliament Hill.
“We will obviously discuss the government’s recent changes along with the need to maintain a healthy housing and mortgage industry in Canada,” the association’s CEO Jim Murphy told MortgageBrokerNews.ca in December.
A large part of CAAMP’s Ottawa presentation was its Annual State of the Residential Mortgage Market report, highlighting the sound management of that secured debt by most Canadians.
The hope continues to be that Ottawa will hold fire on any additional changes to the mortgage rules and the OSFI lending guidelines, also tweaked last year.
Still, brokers continue to express real concern that Flaherty may move to further batten down the hatches if sales begin to climb in the second half of 2013.