Mario Toneguzzi, Calgary Herald

Calgary is expected to feel the biggest impact of new measures announced Friday by the federal government to increase minimum mortgage down payments for homes more than $500,000, says a national economist.

In a report assessing the impact of higher down payments, Benjamin Tal, deputy chief economist with CIBC World Markets, said the share of new home sales that will be impacted by the new measures is close to 10 per cent in Calgary “due to its relatively large share of high-ratio mortgages—not exactly a city that needs additional cooling.”

On Friday, federal Finance Minister Bill Morneau announced the move designed to cool off the booming real estate market in some of Canada’s biggest cities, particularly Vancouver and Toronto.

Beginning in February, homebuyers will have to put 10 per cent down on the portion of the price over $500,000. Anything under $500,000 will still only require a five per cent down payment.

According to the Calgary Real Estate Board, of 18,349 MLS sales so far in the city, up to and including Thursday, 5,912 of them have been for more than $500,000 and 499 have been for more than $1 million. For the same period in 2014, there were 24,934 sales – 8,417 were above $500,000 and 821 were more than $1 million.

The Canadian Association of Home Builders’ – Alberta said in a news release that it is concerned about the impact on the province’s home buyers of higher mortgage down payment requirements.

“Almost 70 per cent of new single-family homes sold so far this year in Alberta were priced above $500,000 and in Calgary that proportion is above 85 per cent. While most buyers of homes costing $500,000 or more already but 10 per cent or more down, we’re concerned when blanket national policies are imposed because of regional housing market issues,” said Jim Rivait, the association’s chief executive.

The association said data from Canada Mortgage and Housing Corp. shows the percentage of new single-family home purchases that sold for more than $500,000 in Alberta’s major cities:  Calgary, 86.4 per cent; Edmonton, 62.5 per cent; Red Deer, 54.8 per cent; Lethbridge, 18.5 per cent; Grande Prairie, 22.4 per cent; Medicine Hat, 19.1 per cent; and Wood Buffalo, 98.1 per cent.

Tanya Eklund, a realtor with RE/MAX Real Estate (Central) in Calgary, said she doesn’t think the new measures will affect many buyers locally in the resale market.

“Under $500,000 is the first-time home buyers market so continuing to have a five per cent down payment is healthy and fair,” she said. “I personally find my buyers between $500,000-$1 million have more than five per cent down. Personal debt in Canada has risen significantly so putting in place a rule that could place some extra responsibility on the consumer is not a bad idea.

“It will be frustrating for the buyers that would have been ready to purchase in this price point with only five per cent down but I do not feel it will greatly affect sales in Calgary.”

Ross Pavl, a realtor with RE/MAX House of Real Estate in Calgary, said close to 70 per cent of home sales in Calgary this year are below the $500,000.

“The new legislation will affect homes priced in the $500,000 to $600,000 range most,” he said. “This range represents 15.1 per cent of the entire market and is the closest to the proposed cut off where there are still many first-time buyers.

“Compare this with 15.3 per cent of all purchasers this year that were looking to buy a home in Calgary between $500,000 to $1 million. Above the $600,000 home price range, many purchasers are coming in with a 10 per cent down payment anyways. This new legislation will cause more potential buyers to now start looking at homes under the $500,000 cut off, creating more demand and price pressure in this category.”

Grace Yan, a realtor with Sotheby’s International Realty Canada in Calgary, said the majority of buyers for homes more than $500,000 have down payments of more than five per cent and don’t typically have minimum down payments.