HOME SALES SET RECORD IN RUSH TO BEAT NEW RULES.

• Canadian home sales rose to a record in December just before tougher mortgage rules took effect, helping make 2017 the second strongest market ever.

Transactions climbed 4.5 percent from November to 45,976, the Canadian Real Estate Association reported Monday, and are up 9 per cent over the past two months. That’s the biggest two-month gain since 2009.

CREA’s monthly report said the number of homes on the market also jumped by 3.3 per cent between November and December. CREA said the bounce likely stemmed from heightened demand for homes ahead of the Office of the Superintendent of Financial Institutions’ tighter stress tests for those with uninsured mortgages that came into effect on Jan. 1.

The rules require wouldbe homebuyers who have more than 20 per cent down payment to prove they can still service their uninsured mortgage at a qualifying rate of the greater of the contractual mortgage rate plus two percentage points or the fiveyear benchmark rate published by the Bank of Canada.

“The new OFSI measures and a shift to a rising- state environment should prevent speculative froth from building again, and contain price growth to a reasonable pace for the remainder of the cycle,” BMO Capital Markets senior economist Robert Kavcic wrote in a note.

It was a tumultuous year for realtors, starting with sharp price gains in the Toronto market that prompted regulators to impose new measures, including taxes on foreign buyers, in order to rein it in. The measures helped to cool Toronto prices, but nationally the market remains robust.

Sixty per cent of all local markets also saw a surge in activity in December with the Greater Toronto Area, Edmonton, Calgary, the Fraser Valley, Vancouver Island, Hamilton- Burlington and Winnipeg leading.

The December surge brings the streak of gains to five months. Sales for all of 2017 fell by 4 per cent from 2016’s record.

The real estate association has cut its sales forecast for 2018 as a result of the anticipated impact of new stress tests, forecasting a 5.3- percent drop in national sales to 486,600 units this year, shaving about 8,500 units from its previous estimate.

While national home prices have come down since peaking in May 2017 was still a strong year. The 9.1- percent year-over-year price gain in December is the secondlargest appreciation for that month in the past decade.

“It will be interesting to see if the monthly sales activity continues to rise despite tighter mortgage regulations,” Gregory Klump, CREA’s chief economist, said in the report.

In the final month of 2017, the average national home price reached just over $ 496,500, up 5.7 per cent from one year earlier. December home sales were up 4.1 per cent from the previous December, signalling that the country is “fully recovering from the slump last summer,” said CREA.

Various real estate experts have said that a set of policies introduced by the Ontario government in April produced the desired market slowdown in Toronto during the second and third quarters following a hot first quarter.

That spike came as no surprise to Toronto- based realtor David Fleming.

While agents typically avoid keeping listings up over the holidays, he saw many bucking their usual habit this year by leaving homes on the market because sales were so strong. Of the three listings he let sit, one sold on Dec. 31 and another on Jan. 2.

“There are definitely people who thought they had to close a deal before Jan. 1. and the numbers are really showing that,” Fleming said.