REINZ & Tony Alexander Real Estate Survey: Wait And See For Many

This is our second survey undertaken since the government announced changes in housing policies on March 23. Of greatest significance in the announcement was the immediate removal of ability to deduct interest expenses from income for new buyers of existing property, and a phase in of the same deduction removal over four years for current property owners. New purchases of newly built properties will retain the deduction along with a five-year brightline test for application of capital gains tax, as opposed to an extension to ten years for new buyers of existing properties.

There has been considerable discussion about the impact of the changes on rents and availability of rental property. We cannot gauge such developments in our survey and in fact it may be a long time before the true impact becomes clear given the four-year phase-in period. But we can nonetheless gain coalface insights into how things are changing and in that regard every indicator we monitor has pulled back this month.

Of particular significance may be the reduction in the gross proportion of real estate agents saying that they are seeing FOMO (fear of missing out) on the part of buyers to 49% from levels above 90% over November to February, 90% in March, and 76% last month.

A net 63% of agents say that they are seeing fewer investors in the market and a net 8% fewer first home buyers. And it looks like the pace of prices growth is slowing with only a net 30% of agents reporting that in their area prices appear to be rising. This reading was 56% last month and 88% in February and is the lowest reading since June.

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