Potentially lower levels of demand might slow down the pace of condo and single-family construction nationwide over the coming year, according to Royal Bank of Canada CEO David McKay.
The B-20 regulatory regime has largely provoked this situation, and McKay acknowledged that despite Canadian housing being in relatively “well-balanced territory” at the moment, the chorus of voices calling for significant change has a point.
“It’s taken a number of buyers out of the market temporarily as they build a greater down payment for that mortgage, it’s cooled housing prices, but it’s all about balancing supply demand and, like every policy, it’s not static,” McKay told the Financial Post. “Maybe you have to re-look at parts of it and tweak it.”
“I wouldn’t want to see some markets cool a lot more than they have, but we needed to slow this down through policy.”
Reducing the barriers to entry, period, will definitely help stimulate greater activity.
Earlier this month, the Ontario Real Estate Association argued for the restoration of an optional 30-year amortization on insured mortgages.
The group also suggested a loosening of the B-20 rules so that any borrower impact would take into account differences in ability to pay.
“Quite frankly, government policies have created a two-tier system where, if you’re rich and get a loan from the bank of mom and dad, you don’t have to worry about these things,” OREA CEO Tim Hudak stated. “But the struggling middle-class, which works hard and saves its money and would normally access a mortgage, has been shut out.”