October 12, 2016 / Real-Estate
The new mortgage rules, announced on Monday, October 3rd by federal Finance Minister Bill Morneau, are slated to come into effect on October 17th. Like any new rules, the impact intended may not be reached without creating additional repercussions.
Reviewing opinions from economists and experts in the field, we can’t help but notice that the inner city redevelopment industry may be less impacted then the greenfield suburban developments. Experts’ opinions clearly identify the first time home buyer to be the most affected. It is expected that the new rules will have a cooling effect on new construction especially on the entry level product. Inner city redevelopment, in the single-detached category, is generally not an entry level product. The new rules will have little effect on this type of home buyer.
This move may further accentuate the current shift in inner city redevelopment. We have seen large residential developers dipping their toes in this market in recent years. Efforts to consolidate land and redevelop existing neighbourhoods are at their highest in large Canadian cities.
This new focus may not help reducing the price of real estate, but, it has a positive effect on redevelopment. The new mortgage rules also force the market towards a more sustainable model away from greenfield development. In an effort to protect our economy over time, we may have helped building more sustainable cities.