Housing prices in Calgary will drop because of new federal mortgage rules, a university professor predicts.

Federal Finance Minister Jim Flaherty announced new rules Tuesday aimed at preventing homebuyers from getting into financial difficulty when mortgage rates rise.

One rule requires a minimum 20 per cent down payment to qualify for Canada Mortgage and Housing Corporation insurance for non-owner-occupied properties purchased as an investment.

"Overall, I don't think it will affect the market all that greatly. You will still buy a house, you just might not buy as big a house as you would have expected before."— Todd Fralic, mortgage broker

This will affect home flippers who drive up prices, hurting buyers and homeowners, said University of Calgary business professor Jim Dewald.

"If we have an oversupply because of speculative prices, frankly that affects everyone of us," he said. "In Calgary our home values are going to go down. It's an imbalance and it's a false market that's creating that imbalance, so I support straightening that out and making the rules more rigorous."

Ottawa's tighter rules, which come into effect April 19, are a good move, he said.

"Some could easily argue that this entire financial crisis we've had was primarily based on lending practices in the U.S., primarily where people were not properly qualified, were speculating and buying units they were not planning on living in just to flip. And that's not a healthy marketplace."

Broker sees short-term sellers' market

But Todd Fralic, president of the Alberta Mortgage Brokers Association, doesn't expect any drastic changes in the housing market.

"Well, in the short term I think it's going to have people going to the market before the April 19 deadline. So if anything there is going to be a bit of a stimulus for the next short while. After that it will probably cool things off a bit.

"But overall, I don't think it will affect the market all that greatly. You will still buy a house, you just might not buy as big a house as you would have expected before."

Calgary has experienced a real estate rebound in the last year, according to statistics released Wednesday from the Canadian Real Estate Association.

The average Calgary residence was worth $397,518 in January, up 5.8 per cent from the year before. New listings in the city were down nearly seven per cent and total dollar volumes were up more than 61 per cent.