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Weak demand, too much demand for prices in Calgary in 19: CREB

Attached houses for sale in Livingstone village with Calgary panorama in the distance on Wednesday, January 30, 2019. CREB predicts another difficult year for home sales.

Gavin Young / Postmedia

The United Conservatives' government has called on the federal government to abolish the rules on mortgages that make it difficult for Albertians to buy home, said Jason Kenney, chairman of the UCP, on Wednesday.

In an interview with a mobster of hundreds of realtors on Calgary Real Estate Board's annual forecast, Kenney said the mortgage stress test was in place in early 2018 to ensure home buyers could continue to afford their mortgages if interest rates rise significantly, it is "an unfair attack on property ownership in Alberta." He said that if he becomes prime minister, he will introduce a legislative proposal to the federal government to abolish the Alberta market rules and encourage other provinces to join.

"One of the reasons why there are fewer affordable homes in Alberta today is because of the unfair Ottawa rules to deal with overheated real estate markets in Toronto and Vancouver," Kenney told reporters. "We (Alberta) did not have the danger of overheating … (Canada Former and Mortgage Corporations) to deal with this problem, it replaced a bazooka rather than a flyswatter."

Kenney's remarks came from CREB's pessimistic forecast of the housing market in 2019, which expects household prices in Calgary to average by 2.3% over the year. The moving prices expected in 2019 are a continuation of the four-year decline in sales activity and stock growth in the Calgary housing market.

"Some factors are really what is happening in the energy sector and how it affects confidence," said Ann-Marie Lurie, chief economist at CREB. "And of course, the real factor is the real labor market. We continue to fight a high unemployment rate, we do not expect that there will be a significant increase in the number of jobs, and that is also true of our housing market."

Lurie declined to comment on Kenney's proposal on a mortgage stress test, but tighter credit conditions, along with higher interest rates, are another factor weighing on housing demand in 2018.

"There is no doubt that the strictest tests have affected the housing market," Lurie said.

According to the Canadian Real Estate Association, buyers who previously qualified for an average home in Calgary would now have to save another $ 76,000 to buy the same house as a result of new mortgage rules.

Cliff Stevenson, a Calgary real estate agent who is CREA's regional director for Alberta, said that growing household inaccessibility due to new loan rules is not just an issue in this province. He said CRAA is lobbying the federal government for "regionalizing" a mortgage stress test across the country.

"We agree with the federal government that the need to cool the two major housing markets in Toronto and Vancouver … but we have largely dealt with the struggle of many regions in Canada that have been severely affected by the stress test and are already suffering from a downturn in the housing market," Stevenson said.

Mortgage stress testing, which aims to reduce the volume of homeowners 'and financial institutions' debts, can occur for all Canadian households – even those who have paid 20% or more. Kenney said the rules are meaningful to Toronto and Vancouver, where real estate speculation was unchecked, but should be used in a "geographically focused way".

He added that the UCP is also interested in working with provincial co-operative cooperatives and ATB financial branches to help the Alberta buyers follow the rules laterally. Only federally regulated creditors are required to apply a stress test, although many other creditors voluntarily apply.

In an interview with Calgary journalists on Wednesday, Prime Minister Rachel Notley said that calling for the removal of the mortgage stress test for Albertans is something the NDP government could "look into," but warned that Albertans actually carry a high level of debt in relation to others Canadians.

"We have to be careful not to find ourselves in a situation where people take over debts they can not handle," she said.

While we expect retail sales to remain at a low level in the course of 2019, CREB is a sign that the Calgary real estate market is beginning to adapt to slower sales. This should help to reduce excess market supply and bring the sector to a more stable position by 2020, CREB said.

The reference price for a family house in Calgary dropped by 1.2 percent in 2018. In December 2018, it reached $ 481,800, down from $ 521,600 in October 2014.

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