Canada may cool housing market; prices won't crash: Poll

Tue Feb 21, 2012 2:26pm EST
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By Louise Egan

OTTAWA (Reuters) - Canada's government will make it tougher for many homebuyers to get mortgages this year as it grapples with an overheated property market, according to analysts in a Reuters poll, who also see prices stabilizing this year but no dramatic collapse.

Ten of 14 economists and strategists surveyed last week in Reuters' first poll on the Canadian housing sector answered "yes" when asked if they thought Ottawa would tighten mortgage rules within the next 12 months.

They expect home prices to stall with a mere 0.1 percent climb in the year to December 2012, and the same in 2013. That is down from a 0.9 percent year-on-year increase in December 2011.

The results were similar to another Reuters poll last month that suggested the five-year slide in U.S. home prices would end this year, followed by a weak recovery in 2013.

If Finance Minister Jim Flaherty tightens requirements for government-backed mortgages it would be his fourth intervention in the real estate market since 2008.

Flaherty could raise the minimum down payment to buy a home from the current 5 percent or reduce the maximum amortization period from 30 years.

Any move would likely come before the prime spring real estate season, analysts said. "Sometime between now and the next budget," said Benoit Durocher, senior economist at Desjardins in Montreal.

The budget is expected in late March.   Continued...