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Department
Economics
Course
ECON 1900
Professor
Avi Cohen
Semester
Fall

Description
Sarah Kar Win Au Page 1 ECON 1900 212503751 24 New home construction slow-down hammers Canada Less work, better economy! Is it healthy to slow down new home construction? A reduction in new home construction across Canada which fell even more than expected. This decline highlighted the challenges facing builders as they struggle to emerge from the worst housing slump in October. One of the reasons is that the Harper government had reined in its previous lax rules for mortgage lending. The maximum amortization period from 30 years to 25 years and decrease the refinancing limit to 80%. New homes construction ruins flow will deteriorate the market’s outlook, less income for people and create housing shortage. Some people think that the decline of new home construction will improve the market’s outlook. A decrease in supply will rise in equilibrium price, the sellers will earn more profit. Although more competition for fewer homes means upward pressure on housing, the quantity sold equals to quantity supplied only. This will cause a decrease in quantity sold. This profit will be less than the profit gain by selling more hoHome. sales were 16.7 lower in Vancouver in October compared to last year, and down 7.1 per cent in Toronto. New home construction slowdown will impose higher living costs. Many people agreed that the number of new homes gear down proved the government’s new mortgage lending rules are effective, however; this may cause other issues. Banks will set higher Sarah Kar Win Au Page 2 ECON 1900 212503751 24 interest rates on other loans such as credit cards and auto loans to offset the loss of mortgage interest. In addition, with the
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