Mortgage stress test causing decline in housing affordability, says CREA economist

CBC News · Posted: Dec 18, 2018 11:10 AM ET | Last Updated: December 18

Real estate prices in Hamilton and Burlington have seen the fourth-highest increase in Canada over the past five years. (Jonathan Hayward/Canadian Press)

Home prices in the Hamilton area have skyrocketed 70 per cent over the past five years, according to a new report from the Canadian Real Estate Association (CREA).

The price increase in the Hamilton-Burlington market — where homes have an average price tag of $581,900 — is the fourth highest in Canada, the report says, but the jump was even greater in Niagara Region.

Since 2013 years prices have leapt a staggering 79 per cent there, although the average cost of a home there at $393,500 — is almost $200,000 less than Hamilton.

CREA economist says the latest numbers indicate that government attempts to slow the rate of price growth are managing to do so.

Sales activity across Canada was down 12.6 per cent year over year and came in below the 10-year average in November, the report found. Sales were down compared to a year ago in three-quarters of markets around the country, including Hamilton-Burlington and the GTA.

“The decline in home ownership affordability caused by this year’s new mortgage stress-test remains very much in evidence,” explained Gregory Klump, CREA’s chief economist in a media release.

“Despite supportive economic and demographic fundamentals, national home sales have begun trending lower. While national home sales were anticipated to recover in the wake of a large drop in activity earlier this year due to the introduction of the stress-test, the rebound appears to have run its course.”

The CREA report details an 58.5 per cent price increase in the GTA over the past five years. The national average was 43 per cent.