A quarter of Canadian homebuyers say they are feeling pinched by the new mortgage stress test that came into effect in January, but the spring season is still looking positive.
A survey conducted by Leger for RE/MAX shows that most markets are set to remain stable or improve, and there is overall optimism
The report says that the average home sale price in the GTA was down almost 10% in January and February from a year earlier, and many areas surrounding the GTA are also more affordable for young families hoping to become first-time buyers.
Western Canada is seeing strong price growth with the average sales price in Greater Vancouver up 11% in January and February to $1,051,513. Victoria has also seen a rise to $831,000 in January and February this year compared to $761,000 in the same period of 2017.
However, the region has other issues on top of the rising prices which may affect spring sales.
"While the stress test did not impact Western Canada's major markets as much as other parts of the country, the foreign buyer's tax and proposed speculation tax in B.C. have remained a concern for buyers," says Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. "In recent weeks, the speculation tax has actually made some buyers hold off on purchasing which may affect the housing market in the next few months."
The result of the stress test and other policy changes is that 1 in 4 homebuyers say they have compromised on the size of their new home while 18% made concessions on the location.
Even so, 55% said they feel they can buy a home that fits their needs, up form 46% a year ago.
"The stress test, along with rising prices over the last two years, has contributed to the evolution of the Canadian homebuyer, and has prompted them to change their perceptions of 'must-haves' such as size and location," says Christopher Alexander, Executive Vice President and Regional Director, RE/MAX INTEGRA Ontario-Atlantic Canada Region. "Homebuyers impacted by regulatory changes beyond their control have adapted to the circumstances and still, more than half feel like they can purchase the right home to suit their needs."
Although prices in Alberta and Atlantic Canada are seeing increases, they are still relatively affordable and first-time buyers are showing interest.