Photo: James Bombales

GTA housing sales took a serious dip in January, and many industry experts pointed to the new mortgage stress test as the culprit. But could other factors be at work?

“It’s too early to tell whether it was the frigid temperatures or the expected payback for a policy-induced swell of activity in the latter stages of 2017, but things quieted down considerably in Toronto’s housing market in January” writes RBC senior economist Robert Hogue in a recent note.

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GTA home resales plunged 22 per cent year-over-year last month, according to data from the Altus Group. Resales dropped 15 per cent between December and January.

Hogue writes that January is typically a slow month for the housing market, and that more time is needed to see what affect new mortgage rules will have on the market moving forward. But, he does concede that new policy had a role to play in the slowdown.

“The chilling of home resale activity and new listings in January after two months of heated gains is consistent with our view that the more stringent qualifying rules for uninsured mortgages that came into effect on January 1 brought forward buying and selling decisions,” he writes.

Hogue predicts that the GTA market is likely to stay quiet until the second half of 2018, as it adjusts to the new rules. But tight market conditions won’t allow things to stay too cool for long.

“We also expect prices to stabilize this year with the market sustaining balance between demand and supply,” he writes.

As for prices? They’ll likely feel some downward pressure for the next few months, especially in the low-rise segment.

“The aggregate benchmark price fell month-over-month for an eighth-straight time in January, which has brought the annual rate of increase down to a four-year low of 5.2 per cent” writes Hogue. “The decline since the May 2017 peak now total 9 per cent with virtually all weakness concentrated in the single-detached segment.”

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