Real Estate Set to Surge on New Rules

A buying frenzy may be around the corner as new borrowing rules and tax regimes re-energize sales

A rush of home buyers trying to beat higher taxes and tighter mortgage regulations could pump up the housing market just as it's showing signs of cooling.

The real estate market pulled back slightly in January after its record run, although both sales and prices were up sharply from the depressed levels of a year ago.

Economists believe, however, that home buyers will push to beat new regulations, unveiled this week by Finance Minister Jim Flaherty, which come into effect April 19.

They also think that there will be a rush to beat the new harmonized sales tax in Ontario and British Columbia later this year.

That could lead to a spike in sales in the spring, followed by a sharp pullback and lower prices in the second half the year, but nothing that would crater the market.

An increase in supply as owners were enticed to list their homes by high prices, and a slight ebbing of demand as consumers realized things were getting a little too pricey, led to a decrease in month-over-month sales in January for the first time since December, 2008.

The 2.8-per-cent decline was small, but comes as market watchers anxiously track the market in search of an asset bubble.

The federal government moved this week to curtail speculation in what has been a red-hot market.