If prospective homeowners are finding it too pricey to buy a home in Kingston, they may be in luck because the city’s hike in housing prices is expected to even out in the coming years, according to a national housing report.
The cost of a home in Kingston has been rising steadily for the last several years and spiked dramatically in 2018, according to a Moody’s Analytics report released in February.
The report noted that, overall, Canada’s housing market is evening out.
According to Andres Carbacho-Burgos, author of the Moody’s Analytics report, the decline in Canadian house prices is largely due to government interruption.
“The housing market in Canada has been slowed substantially over the past two to three years by policy interventions,” said Carbacho-Burgos, who is head housing economist for Moody’s Analytics.
Last year, the federal government introduced new guidelines to deal with projected higher mortgage rates, including a new mortgage stress test that makes it more difficult for people to qualify for a mortgage.
Action was also taken provincially in Ontario and British Columbia to impose taxes on foreign buyers and vacant properties to deal with both Toronto’s and Vancouver’s housing bubbles.
In 2017 and 2018, these policy changes directly affected Canada’s most bloated housing markets, but Kingston seemed to go the other way.
“Kingston was one of a minority of metro areas in Canada where house price growth increased despite mortgage rate tightening and despite the new mortgage stress tests,” Carbacho-Burgos said.
Carbacho-Burgos said it’s unclear exactly what led to the high housing prices in Kingston but that it’s possible that demand from Toronto could have affected housing prices in the area.
Kingston has also suffered from an extremely low rental vacancy rate over the last several years, reaching 0.6 per cent in 2018 — the lowest rate in Ontario and the second lowest in all of Canada.
“It could also be the case that increasing rents due to low vacancy rates also increase the asking price that homeowners ask for their apartments as a result.”
Either way, according to Carbacho-Burgos’ analysis, Kingston’s housing market is supposed to cool down in the next couple of years.
According to the Moody’s report, the price for a Kingston home is forecasted to rise by only two per cent by the end of 2019 and by 0.2 per cent from 2019 to 2020.
But prices haven’t started falling to those levels yet.
The Canadian Real Estate Association says the average price of homes sold in Kingston in April 2019 was a record $415,435, rising 11.4 per cent from April 2018, and the average home price in the first four months of 2019 was $390,488, up 7.5 per cent from the first four months of 2018.
Nevertheless, Carbacho-Burgos expects federal regulations to catch up to Kingston real estate and for the housing market to level out in the coming years.
Sign up for our weekly Money123 newsletter
© 2019 Global News, a division of Corus Entertainment Inc.
Source: Read Full Article