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Both Siddall’s comments and the DBRS report come on the same day that new federal mortgage rules — which will make it harder for consumers to borrow money by forcing them to qualify based on a much higher rate than the one on their contract — went into effect .

Phil Soper, the chief executive of Royal LePage Real Estate Services, applauded the government for rules cracking down on the misuse of the principal residence tax exemption, but questioned whether the government might be going too far in other ways.

“The housing industry continues to do the heavy lifting for the Canadian economy. And in our largest cities, we have these tax burdens,” said Soper, pointing to a double land transfer tax in Toronto and 15 per cent additional property transfer tax on foreign buyers in Vancouver. “All of these changes, whether they be municipal, provincial or federal, are all additive, and we have to be very, very careful that we don’t put too much of a drag on this primary engine of economic growth.”

Another factor that could be a major driver in slowing home price growth would be rising mortgage rates. Moody’s Analytics is expecting to see rates rise over the next two years as U.S. and Canadian monetary policy revert to pre-Great Recession norms.

Moody’s Carbacho-Burgos said he just can’t see the hard landing, which he defines as a national price decline of at least 10 per cent. However, his report was generated before the latest changes to mortgage rules in Canada, which tighten credit access.

“What we would expect, based on rule changes, is an exacerbating or cooling trend nationally. In particular Toronto, which will have much slower growth and its neighbouring areas as a result of the rule changes,” said Carbacho-Burgos. “But we don’t see any reversion to a house price crash.”

Financial Post

gmarr@postmedia.com

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