The harsher stress test mandated by the new federal real estate measures will do more harm than good to the market, specifically to the younger consumer base.
Montreal agent Thierry Lindor noted that fully 90 per cent of his clients at Remax l'Espace Griffintown who have withdrawn from the housing market are millennials.
Lindor warned that the revised rules, which now test a borrower’s ability to pay at the Bank of Canada’s 4.64 per cent posted rate, will make younger buyers more reluctant—especially considering that salary growth has remained relatively static over the past few years.
“We're already a bit behind [the rest of Canada] in terms of home ownership,” Lindor told CBC News
. “To put such a stress test on our market when we know that these are measures that were taken for Toronto and Vancouver — it's like if your car has a flat and you decide to change your car.”
“They decided to pass this law for all of Canada and we're feeling the impact on the sales as well.”
Lindor added that the regulatory revisions had the undesirable effect of some consumers hastily making decisions, which might prove problematic to the market in the near future.
“Some of my brokers had clients rushing to purchase,” the agent explained. “You don't rush into a $500,000 investment.”
One of Lindor’s clients, Jasbeen Lallbahadoor, said that she had to back out of the $350,000 deal for a townhouse that she had been eyeing prior to the implementation of the new rules.
“I feel deceived by the government,” Lallbahadoor lamented. “You're planning ahead and then all of a sudden the government comes and takes it away from you.”