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Canada’s largest housing market will now see how it reacts to new rules announced Monday by the federal government which will make it tougher to qualify for a loan.

Among the changes will be a stipulation that consumers qualify based on the posted rate for a five-year fixed rate mortgage, now 4.64 per cent — a move that will see many consumers receive smaller loans.

“We continued to see strong demand for ownership housing up against a short supply of listings in the Greater Toronto Area in September. The sustained lack of inventory in many neighbourhoods across the GTA continued to underpin high rates of price growth for all home types,” said Larry Cerqua, president of the board.

The federal government seems to be acknowledging that a correction is coming in the market. “In the short-term, the change may lead to a temporary reduction in the pace of housing market activity over the next year,” finance department spokesman Jack Aubry said Wednesday in an e-mail to Bloomberg News. “While historical data suggest that, nationwide, up to eight per cent of new home purchases could be affected during the first year of implementation, the precise impact will vary depending on specific homebuyer circumstances and behaviours.”

That reduction would come as the Vancouver market is already dealing with a severe drop in sales following a provincial government decision to add an additional 15 per cent property transfer tax on foreign buyers in the metro region. The Real Estate Board of Greater Vancouver reported Tuesday that sales were down almost 33 per cent in September from a year ago.