Last year the federal government, concerned about Canadians’ rising debt levels, cut the maximum amortization period for a government-insured mortgage to 25 years from 30 years and capped home equity loans at a maximum of 80% of a property’s value — down from 85%. Economists at the time expected the tightening to shave 10% to 20% off property prices, and cut into Canada’s GDP.
“It looks like the much-maligned Canadian housing market is way more resilient than those Canada-doomsayers would believe,” Rosenberg wrote in his morning briefing Tuesday.
The economist said existing home sales shot up “an impressive” 6.4% in the second quarter, the strongest performance since the end of 2010.
Existing home sales in June strengthened across the country, including a 6.4% leap in Vancouver, the market hardest hit by the slowdown. Even Toronto, ” a notable under performer,” saw sales climb 1%, he said.
“Bottom line: The Canadian housing market is not collapsing, but rather stabilizing after achieving the government-induced soft landing,” said Rosenberg.