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Among the key changes brought in by the government in October was a stress test for any mortgage that is backed by Ottawa. Consumers must now qualify based on the posted five-year fixed rate, now 4.64 per cent, instead of the much lower rate on their contract.

Ratespy.com says consumers are currently able to borrow at as low as 2.18 per cent on a five-year fixed rate mortgage. Qualifying based on the posted rate has shut out some consumers because it ultimately means they must have the ability to pay a much higher monthly mortgage payment.

British Columbia, where realtors have complained about a 15 per cent additional property transfer tax on foreign buyers in the metro Vancouver area, is expected to drive much of the national decline in average price. Sales in the province are forecast to drop by 12.2 per cent next year and prices by 7.8 per cent, mostly because of a decline in single family homes. Ontario is forecast by CREA to see a 2.7 per cent decline in sales in 2017 but a one per cent increase in prices.

“Mortgage regulations were further tightened following CREA’s previous forecast. In the near term, tightened regulations are expected to reduce the number of first-time buyers who qualify for mortgage financing, particularly in pricier markets where there is a severe shortage of lower-priced listings,” the organization said in a release, to explain the revision of its forecast downward.

Just three months ago, CREA was forecasting average prices to reach $486,600 in 2017, which would have been a 0.2 per cent decline from its previous forecast for 2016 prices to reach $487,800. The 2016 updated forecast now calls for prices to reach $489,500.