Among Canada’s aspiring home owners, the millennial demographic endured probably the worst impact of the federal mortgage stress test that came into effect earlier this year, according to Mortgage Professionals Canada.
“The government’s recent policies stifled the hopes of aspiring homeowners,” MPC board member Mark Kerzner said at a press conference last week, as quoted by CTV News.
“Our members have seen, firsthand, a significant portion of aspiring Canadians who have been pushed out of the market.”
This has inevitably steered young Canadians towards rental property as the only reasonable alternative.
The need to save for already crippling down payments means that millennials need to stay in this housing type for longer periods – thus inducing further negative feedback onto the market by pulling down vacancy rates to record lows and heating up rental price growth.
“I would suggest that the Liberals are acutely aware that millennials are a large voting demographic … and individuals whose interest they are looking to protect long-term,” MPC president Paul Taylor stated.
Read more: Homeownership rates decline after almost 50 years of continuous growth
Aside from derailing millennials’ home ownership plans, the stress test requirement also played a central role in the sales decline observed across the country’s markets, Kerzner noted.
Latest data from the Canadian Real Estate Association indicated a 0.4% month-over-month sales drop in September, the first such decline since April this year. This mirrored the larger annual trend with last month’s sales falling by 8.9% compared to September 2017.