The latest data on Canadian existing home sales suggests that the impact of the tighter mortgage rules introduced this year may be easing.
In a report reacting to the latest CREA sales data for June, TD Economics economist Ksenia Bushmeneva says the sales release was a “Goldilocks report.”
Sales increased while prices stabilized and inventory declined to further tighten market conditions.
“Taken together, these changes support the notion that housing market is stabilizing after significant volatility in the first half of the year related to the implementation of B-20 rules,” Bushmeneva writes.
She adds that historically, the impact of policy changes such as those taken by OSFI in January, is swift but short-lived.
“We expect that resale activity hit its trough in Q2 and will begin to gradually recover thereafter. As a result, residential investment should start contributing positively to GDP growth in Q3 and Q4 of this year,” Bushmeneva predicts.
In addition, the TD Economics’ report highlights the recent BoC Senior Loan Officer Survey which indicated easing credit conditions for mortgages as lender competition intensifies. This, it says, should also help with the normalization of the housing market.