While new mortgage rules and higher interest rates will keep the Ontario housing market cool for the first few months of 2018, Quebec’s housing market will starting burning up. At least, that’s the prediction of one credit union.

According to a report released today by Desjardins, strong economic fundamentals will boost Quebec’s housing market in 2018, while new regulations will continue to cool the Ontario market.

One reason things are looking good for Quebec? The strongest job market the province has seen in over a decade. “The extremely favourable economic backdrop for Quebec consumers is fueling this surge in Quebec’s residential sector,” reads the report.

In the above chart, the credit union shows that Quebec created nearly 70,000 jobs in 2017, a number economists predict will rise in 2018.

The favourable economic conditions are convincing more and more residents to buy. After hitting lows in 2009 and 2015, over 40 per cent of Quebec residents believe that 2018 will be a good time to make a major purchase.

Meanwhile, Ontario’s housing market is recovering from the psychological impacts of the province’s Fair Housing Plan, introduced in April. While sales have been steadily climbing since then, Desjardins predicts that higher interest rates and new mortgage rules will keep the market cool in 2018.

“Two elements could rein in the thriving housing market in 2018,” reads the report. “Borrowers taking out new loans or renewing their mortgages will be paying higher interest rates….[and] the federal government introduced new rules for mortgages with a downpayment of 20 per cent of more.”

Finally, the credit union points to a five-year high in housing starts in Quebec as a sign that the province’s real estate market will enjoy a banner year.

“Housing starts soared by almost 20 per cent last year, the sharpest increase since early 2010,” reads the report.

Though the credit union is predicting a red hot year for the Quebec real estate market, it does note that the new regulation will also have some impact on the Quebec market.

“It remains to be seen how the successive rate hikes and stricter mortgage rules will impact new loans across the country for mortgages with a downpayment of 20 per cent or more,” reads the report.

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