All right, I'm on it.
Tamara Barker Watson will be sharing my time, so we'll be diligent on that.
Good evening, Mr. Chair and committee members. My name is Sherry Donovan and with me this evening is Tamara Barker Watson. She's president of the Nova Scotia Home Builders' Association, and also the owner of a 20-year, new-home construction company in Halifax.
Thank you for the invitation to appear.
The issue today is of great importance for us in the Atlantic provinces, which is where we'll concentrate most of our presentation this evening. We'll be talking about the impact the new mortgage rules stress test is having on the eastern Canadian economy, how it affects home ownership for young people, and the impact it will also have on seniors.
We also feel that having one set of rules for the entire country is not the best solution when it relates to housing. We understand that this is about mitigating risk on a large scale across the country. However, what has been achieved is that through this mitigation of risk, there has been cause for great concern about the stress test and the impact these changes will have on the regional residential construction industries that are in decline in the Atlantic provinces. We are still in deep recovery mode from the weak economy, and this is being done at a time when we just cannot afford to have it happen. These new mortgage rules are exacerbating the problem by hurting the entire economy.
For example, from an economic standpoint, in Halifax we went from over 1,000 new single detached housing starts in 2009 to as few as only 400 last year, and according to CMHC, these starts in Nova Scotia continue to remain below the 10-year trend of 900 units. Further to these declining numbers in Halifax, the same situation can be felt all across Atlantic Canada. When you couple it with the new mortgage rules, this is significant.
One testimonial I feel is important to share is from a mortgage lender in Newfoundland. Only a week after the federal announcement, they shared that they would see an even further decline. They estimate that 25% to 30% of the clients they had in the past few months would not have qualified under the new guidelines. As well, one Newfoundland builder also went from 50 home sales on average between a typical October to December season, to zero this past October to December after the new rules came into effect. This is huge.
This is not a positive outcome for Atlantic Canada or the entire country. What seems to be a barrier is the same rules from coast to coast. We are aware that indebtedness of Canadians is a serious issue, but the unintended consequences that have spun out as a result of the new rules have created winners and losers. Atlantic Canada is coming out on the losing end of this equation. This is one of the key reasons we feel that regional rules would be a better solution for Canadians.
Let's look at two specific groups in the home ownership equation: seniors and first-time homebuyers. The new mortgage rules prevent many young people from beginning asset accumulation as many are unable to qualify for a mortgage under the new rules. In addition to the first-time homebuyers being at risk, the unintended consequence is that it will also have an impact on the seniors' market. With a reduced number of buyers seeking to purchase homes, seniors will be less able to access equity in their homes, and it will create disruption in their retirement or downsizing plans. This is a concern for us where the demographic of seniors is higher in Atlantic Canada than in any other area in Canada.
Tamara.