Strict new mortgage rules could cool down Calgary construction
Posted Dec 5, 2017 1:46 pm.
This article is more than 5 years old.
All Canadian provinces are seeing an uptick in residential construction, but there are concerns tighter regulations on buyers could put a dent in Calgary’s recovery.
A new Statistics Canada report says residential construction investment was up 12 per cent in Alberta in the third quarter of 2017 compared to last year. The boost was mainly due to almost $400 million pumped into single family homes so far this year. Bild Calgary, an association representing home builders is not surprised by the increase but believes there are challenges ahead.
“The mortgage eligibility rules that were introduced by the feds have certainly caused some concerns,” said CEO Guy Huntingford. “I think over time that will right itself but in the short term that is definitely a concern.”
The rules require buyers with less than a 20 per cent down payment to take a stress test to ensure the borrower can still service their loan if interest rates rise, or their personal finances fall. It’s especially impacting first-time homebuyers.
Despite the impact, Huntingford said it will be short lived.
“There’s some good momentum and certainly a lot of the builders that are members of our organization are very bullish on the market. They see a lot of opportunity.”
Other parts of the country posting strong numbers include Manitoba and Ontario. Renovations were also chugging along. They lead the sector with an eight per cent increase nationwide amounting to $15.5 billion in investment.
