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The recent cooling in Canada's housing market is a direct result of tighter mortgage rules put in place by Ottawa over the summer, according to the Conference Board.
"A widespread drop in sales followed the latest tightening of mortgage lending regulations," Robin Wiebe, a senior economist at the Conference Board, said in a statement announcing the data.
Real estate data from the Ottawa-based think tank showed sales were down in 21 of 28 markets in August -- with sales down more than 5 percent in 16 of those markets.
When comparing sales data from a year earlier, 20 of the 28 markets posted a decline, according to the report.
Other data also points to a cooling in the Canadian housing market, the Conference Board says. The number of new homes listed on the market in August were down in 17 of 28 markets from July and from a year earlier
"Falling listings are another sign of weakness, because homeowners are less likely to list when the market is soft," Wiebe says.
Wiebe expects home prices to rise over the next year in 25 of 28 markets -- with the only declines forecast in the Victoria, Vancouver and Fraser Valley.
In July, Ottawa implemented a number of changes to the mortgage market that included shortening the maximum mortgage amortization period to 25 years from 30 years and lowering the amount homeowners can borrow against their house to 80 percent from 85 percent, among other changes.
While many economists say those changes have brought a chill to the Canadian housing market, they add that as long as interest rates on mortgages remain at their record low levels, consumers will continue to take on debt to maintain high home prices.
"[The] new guidelines will only go part of the way in unwinding the imbalances developed in the Canadian housing market. As long as interest rates remain at their current low levels, households still have a strong incentive to borrow and the overvaluation in the housing market will persist," TD economists said in a recent note to clients. "Ultimately, interest rate increases by the Bank of Canada are needed to ensure sustainable growth in the Canadian housing market."
They don't expect the Bank of Canada -- whose benchmark rate helps determine the interest rate on mortgages -- to start raising that rate until the second half of next year.